Project financing likely to have shorter maturity periods, GPCA Forum told
11:51 AM MST | December 23, 2009 | News Release
Dubai, December 10 2009: The shorter maturity and the associated refinancing needs are the major risks for project financing in the petrochemical sector as stability returns to credit markets, a senior official of the Central Bank of Bahrain said at the Fourth Annual GPCA Forum today.
Speaking on behalf of H.E. Rasheed M. Al-Maraj, Governor of the Central Bank of Bahrain on the subject of Financing Opportunities and Risks for Mideast Petrochemicals & Energy Projects in times of a Global Crisis, Mr Khalid Hamad, Executive Director of Banking Supervision, Central Bank of Bahrain, said: “Financing is still available for sound projects but it is unlikely that we will see an immediate return to twenty-year maturities. Project Development will need to take into account not only a higher cost of credit, but also the need to refinance at some point during the life of the project.”
In a keynote address to the over 1,100 delegates on the concluding day of the Forum, he said the regional petrochemical industry could benefit from alternatives to bank such as Islamic finance. “However, until there is greater consolidation in the Islamic financial sector, Islamic banks themselves are unlikely to be sufficiently large to finance major projects. For that, Islamic securities -- sukuk – may provide a more viable financing model,” he said.
Hamad stressed the need for Middle East to develop its capital markets and broaden the range of financing options for major projects. As the global economic recovery takes hold, new opportunities in the petrochemicals sector will become more apparent and the emerging markets will play a bigger role in the global economy. “This will have significant implications for the demand for petrochemical products and hence for opportunities in the sector,” he said.
Addressing the Forum earlier, Hamad Al Terkait, Vice Chairman of GPCA and CEO of Equate Petrochemical Company, said the Gulf region is, and will, remain a strong focus of growth and progress for the global petrochemicals and chemicals industry. Access to low-cost feedstocks remains the strongest asset that the Gulf region, which needs to ensure that their utilization is planned in a systematic, manner. “This way we will guarantee growth for the sector in the coming decades. As members of the GPCA, we have to look at strong and stable partnerships to reach the larger global markets,” Al Terkait said.
Adding other dimensions to the vantage position of the Middle East and the Gulf region, Greg Garland, President and CEO, Chevron Philips Chemical, said that strong partnerships with the regional players, access to low-cost feedstocks, easy access to emerging markets and valuable Human Resources are of prime consideration as global companies continue to expand in the Gulf region and maintain a positive outlook for the Gulf region.
The Fourth GPCA Annual Forum got underway on December 9, 2009 with the Saudi Arabia’s Minister of Petroleum and Mineral Resources H.E. Ali bin Ibrahim Al-Naimi delivering the inaugural keynote address to over 1,000 delegates representing the petrochemical and chemical industry, its supply chain and associated businesses including financing and banking.
The flagship event of the petrochemical and chemical industry in the Gulf region has grown over the first three editions to become a truly international event, attracting delegates from the world over. Despite the global recession, this year’s Forum is the largest in terms of delegate attendance. The Fourth Annual Forum is being held at the InterContinental Dubai Festival City on the historic Dubai Creek.
The concluding day at the Forum also featured a crucial breakout session on “Pursuing Sustainability in the Chemical Industry”, with a focus on the sustainability initiatives taken by the petrochemical and chemical industry as part of its long-term growth strategy.
About the Gulf Petrochemicals & Chemicals Association
Gulf Petrochemicals and Chemicals Association (GPCA), the first such industry association in the Middle East, has grown from strength to strength since its inception in March 2006, steering the regional industry towards a whole new era of co-operation. As the regions’ Petrochemicals and Chemicals Industry’s representative body, GPCA aims to enhance the role of the region in international debate and policy making to facilitate regional co-operation, and to ensure that growth is both sustainable and socially responsible. GPCA’s mission is to offer its members networking opportunities through various platforms to meet and share knowledge; exchange insights and expertise and advocate the development, growth and prosperity of the petrochemicals and chemicals industry and related businesses in the Gulf. Additional information is available at www.gpca.org.ae.
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