The study highlights the industry’s growth is largely due to new capacity added in Saudi Arabia, the region’s largest petrochemical producer with 99.1 million tonnes of capacity, representing a 66% share of regional capacity. The report highlights a fall from the Gulf chemical industry’s growth rate of 5% in 2015, due in part to feedstock supply constraints and global economic uncertainty.
‘Transformational’ new, highly complex projects in the region, such as the $20 billion Sadara Chemical joint venture between Saudi Aramco and Dow, and KEMYA Elastomer Plant, an affiliate of SABIC and ExxonMobil Chemicals, point to a positive medium term outlook for growth.
The drop from 2015 figures can also be attributed to new capacity additions coming from specialty chemicals, which tend to be lower in volume but higher in value compared to commodity petrochemicals. In addition, the report notes that GCC chemicals capacity utilization is more than 90% over the past five years, 12 percentage points above the 78% global industry’s utilization average in 2016.
“The regional industry continues to grow healthily by integrating new technologies, building better strategic partnerships and navigating smartly around global economic uncertainties,” said Dr Abdulwahab Al Sadoun, secretary-general, GPCA.
He said: “The region continues to make significant investments in greenfield plant operations as well as brownfield efficiency gains as GCC producers explore new and often unconventional sources of feedstock to drive chemical output.”
Al Sadoun added: “Apart from advancing investment and innovation in the industry, the multibillion dollar project announcements, new technologies and capacity addition have contributed to a surge in job opportunities.”
The performance of the industry continues to depend on factors linked to feedstock and energy prices, along with labor productivity, capital intensity, links with the customers, knowledge of markets and uncertainty around the world.
In 2016, projects worth $13bn were announced in the region, coming online between 2020 and 2024 and adding eight million tonnes production capacity. The projects contribute to as many as new 4,000 jobs.