The GCC petrochemical capacity is estimated to increase from 77.3 million tonnes per annum (MTPA) to 113 MTPA at the end of 2015 according to the Gulf Petrochemical and Chemicals Association (GPCA), with both long and short term opportunities.
Chairman Abdulmohsen Al Majnouni recently spoke to The World Refining Association explaining how to capitalise on these opportunities whilst highlighting the vulnerabilities of this sector.
The petrochemical industry in the GCC has been vulnerable to financial crisis, as it has consistently seen up and down cycles in recent years.
It has been revealed that these cycles follow the refining industry cycles with a six to twelve month lag, however with recent advances in the petrochemical industry, the cyclic effect may not be the case anymore.
"The introduction of specialty or performance chemicals has differentiated the refining from petrochemical industries," said Al Majnouni.
"The more creative manufacturers are in developing new enhanced products, the more sustainable they become. The more efficient the petrochemicals industry becomes, the less susceptible and less prone to financial crisis they are."
The GPCA reports that the GCC petrochemicals production capacity grew 13.5 per cent last year to nearly 116 billion tonnes, where Saudi Arabia alone was responsible for more than half of the US$100 billion in sales generated by the GCC petrochemical sector.
According to the Kuwait Financial Centre (Markaz), Saudi Arabia tops the list with US$12 billion of projects under execution and another US$41 billion in future projects.
Furthermore, petrochemical projects worth US$19 billion are under execution in the GCC providing opportunities in both the long and short terms.
Al Majnouni, said: "The major short term opportunities are in more integrated specialty and performance chemicals.
“These are basically secondary and tertiary industries. This is especially true for the Middle East countries as the supply of cheap feedstock is questionable."
He further continued to state that in the long term, the opportunities will be found in the compounding industries, detergent basics, pharmaceuticals, rubbers and tires.
Previously, companies operating in the GCC have enjoyed subsidised feedstock and less competition in the petrochemical area, however, now, competition and the availability of feedstock are two factors that demonstrate promise and excitement.
"Now, not only has the feedstock become scarce and limited, but the entrance of many international companies in the business has made it very competitive.
“Companies have become smarter, energy efficient, cost effective and more sustainable," said Al Majnouni.