According to Dr. Abdulwahab Al-Sadoun, Secretary General of the GPCA, 7th Annual Gulf Petrochemicals and Chemicals Association i.e. GPCA Forum, was organized in Dubai from November 27-29 of 2012, where a report was given about Gulf producers who explored the opportunities to expand capacity, diversify production and realize the region’s full potential to meet oncoming challenges and opportunities. He also said that, the regional industry should work together, more closely than before, to sustain competitiveness in the face of the new market realities.
According to the reports, the theme of the forum which was given as sustaining competitiveness in a rapidly changing world reflects the scale of the challenges and opportunities faced by the regional petrochemicals industry. According to the most recent GPCA data, the petrochemicals capacity is exponentially expanding in the GCC. There was regional capacity growth of 10% in 2011, reaching 121 million tons per annum. Between 2007 and 2011 regional petrochemicals capacity expanded at a CAGR of 13%. As the global economy edges out of recession, wage inflation and rising raw materials costs were incurred, which are having a knock-on effect on the bottom line of the GCC petrochemicals sector.
In the 7th Annual GPCA Forum, there were highlights given on the Gulf petrochemicals industry’s remarkable growth over the years. The industry has made optimum use of the opportunities available. Inspite of the regional industry’s uncertainties and challenging market conditions, it has managed to demonstrate strong growth according to Al-Sadoun.
The Forum also highlighted encouraging developments for the industry. Beside the expansion of the indigenous petrochemical production capability, the Gulf producers from Saudi Arabia, Kuwait, Qatar and Abu Dhabi are embarking on an aggressive growth strategy through the acquisition of assets in major markets. It also provided a platform to showcase the contribution of petrochemicals and chemicals in the diversification of local industry and career development for the indigenous workforce.
Report says that, at present the Gulf hold around 20% of the world’s proven natural gas reserves. Despite the cost competitiveness of Gulf-based petrochemicals producers built on such strategic assets, experts at the forum forced the industry to prepare itself for new challenges, mainly due to cool Chinese economy which causes reduced demand for Gulf exports.
Natural gas in the Gulf region is estimated to be 1,496.2 trillion cubic feet and this is not enough to sustain the growing demand for gas. More and more industries besides petrochemicals are now competing for natural gas and this has become the most worrying problem of the entire region that appears to run short of natural gas despite its massive reserves according to the latest BP statistical review of world energy.
The report say that, there is a heavy demand on gas for electricity generation and water desalination, mainly due to the Gulf’s rapidly growing population. Abu Dhabi continues to set the pace for petrochemicals development in the UAE, with sales of US$2.7 billion in 2011, reflecting 21% revenue growth as compared to 2010. Last year the total output was 6 million tons, or 5% of the Gulf’s total production of 120 million tons. Abu Dhabi also adopted an ambitious inorganic growth strategy designed to strengthen its industry’s position in the plastics sector, in terms of products portfolio and access to advanced technology.
According to new research released at the Forum, addition 34,564 jobs were made between 2010 and 2011 of the Gulf petrochemicals sector with an increase of 11% whereas 88% of the new positions went to Saudi nationals. The industry’s total workforce in the UAE stood at 8,000 last year, equivalent to 2% of all employees in the country’s manufacturing sector according to GPCA findings.