Catalyst

Discussions at the Gulf Petrochemicals and Chemicals Association (GPCA; Dubai) second annual forum, held this week in Dubai, illustrate that it is no longer accurate to tag the Mideast as an emerging or developing region, at least when it comes to petrochemicals.
Mideast operations now define the world-scale standard in ethylene and derivatives, and the region is set to dominate petchem world trade. Mideast polyethylene (PE) exports will more than triple between 2006 and 2012, to 8.8 million m.t./year, says Volker Trautz, CEO of Basell. In polypropylene (PP), the region will shift from an importer in 2006 to a net exporter of 4.4 million m.t. by 2012.
Global petchem markets and margins have remained strong for the past few years, aided by healthy global demand and tight supply as a result of Mideast capacity delays. Basell has lowered its internal 2008-09 PP and PE capacity estimates due to project construction delays across the Mideast, but has raised its 2011 estimates by more than 5 million m.t./year compared with its 2006 forecast as delayed and newly announced capacity comes online. “Today’s situation should not lead to complacency,” Trautz says. “We are facing [an even larger] surge from the Mideast but it will occur later.

The Second Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum has attracted more than 750 delegates, a big increase on the 450 delegates who attended the first meeting, says GPCA chairman Mohamed Al-Mady, who is also vice chairman and CEO of Saudi Basic Industries Corp. (SABIC). “I am proud of the progress GPCA has made in its short history,” Al-Mady said in his opening remarks to the forum in Dubai today.
Al-Mady, also in his opening address, expressed concern about rising project construction costs in the Middle East. “This, I believe, is of great concern as capital costs for new projects have gone through the roof,” he says. “It makes it difficult to achieve acceptable financial targets when capital costs have risen so much. I believe this will lead to some project delays and probably some cancellations over the next few years. In time, this bubble will deflate, as it is not sustainable at present levels,” Al-Mady says.
The petrochemicals and chemicals sector is approaching a period of overbuilding accompanied be weaker markets. “Our industry has experienced these periods of overcapacity and slow growth numerous times in the past and has worked through them successfully and emerged stronger,” Al-Mady says. “I am certain we will do so once more.”

The rapidly emerging petrochemical industries of China, India, and the Middle East are on course to become the world’s biggest in terms of overall capacity, Mukesh D. Ambani, chairman and managing director of Reliance Industries told attendees in Wednesday’s opening keynote speech at the second Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum in Dubai. The feedstock-rich Middle East, and rapidly growing Chinese and Indian economies “are bound to lead the petrochemical industry.” The three regions can together form “a new silk route,” heralding “a new age” in the petrochemical sector, Ambani told GPCA delegates. “It is a change of profound significance for the industry,” Ambani says.