GCC chemical capacity is expected to increase by 33.6% in this decade, reaching 231.8mn tonnes, driven by refining expansion and chemical integration, a recent report has shown.
The Gulf Co-operation Council overseas production capacity, according to the Gulf Petrochemicals and Chemicals Association (GPCA), is also projected to expand by a CAGR of 7.6% reaching 38.7mn tonnes by 2027, with the bulk of growth set to take place in Asia.
Innovative crude oil-to-chemicals (COTC) technology developments are considered as the “path forward to attractive growth” in chemical production, leading to a yield increase of between 40%-70%, it said.
Continued strong growth in petrochemical demand is expected in the coming years, as demand for chemicals will rise 70% over the next 15 years, driven by strong population increase and rise in the middle class.
As a commodity focused industry, GCC chemical producers will continue to contend with key external challenges such as changing industry competitiveness, rising self-sufficiency of China and the US, challenging trade developments and the growing role of technology and innovation.
To remain competitive, the GPCA noted regional producers will need to make bold strategic moves into new products, technologies and geographies to continue to claim their global position.
“Drawing upon the lessons learned of the past decade, company executives will need to remain vigilant to the many risks and uncertainties lurking on the horizon into 2020, while standing ready to embrace new opportunities for profitable growth in an evolving market landscape.
“Building a diverse set of capabilities for the long-term future around the energy transition and the circular economy will be particularly important as will adopting financial discipline and prudent investment strategies. This will help stabilise performance and reassure the chemical markets in the near term, while providing a solid foundation for growth into the new decade,” GPCA said.
As the voice of the regional chemical industry, GPCA said it will continue to spotlight issues which impact on the industry’s profitability and growth, as well as advocate for conducive regulations enacted through a pro-active dialogue with regional governments and key trading partners.
The GPCA, which include many member companies from Qatar, represents the downstream hydrocarbon industry in the Gulf Co-operation Council region.
Established in 2006, the association represents more than 250 member companies from the chemical and allied industries, accounting for over 95% of chemical output in the Gulf region. The industry makes up the second largest manufacturing sector in the region, producing up to $108bn worth of products a year.