Officials and industrialists from Gulf Arab oil producers will converge on Abu Dhabi next month to discuss their petrochemical industry, which has already attracted in excess of $70 billion (Dh257bn) within an ongoing industrial drive.
The Doha-based Gulf Organisation for Industrial Consulting (GOIC), which advises on manufacturing policies in the six-nation Gulf Co-operation Council (GCC), is sponsoring the January 20-21 conference that will also attract scores of experts from other Arab and non-Arab states.
Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan, Deputy Supreme Commander of the Armed Forces, will address the event, which will attract key global personalities, including Gerhard Schröder, chancellor of Germany during 1998-2006 and recipient of the 2001 Nobel Prize in Economics, and Joseph Stiglitz, chief economist and senior vice-president of the World Bank during 1997-2000 and former chairman of the US Council of Economic Advisors, also Noble laureate in Economics.
The Petrochemical Sector: a vision for 2020 conference, the GCC’s 11th, will be held amidst a drive by the six members to expand their petrochemical industry as part of an ongoing programme to diversify their oil-reliant economies.
“The conference is aimed at creating a vision of the industry in the GCC in 2020. The agenda includes an open discussion session with their Excellencies the ministers of industry in the GCC, alongside four work sessions, subsidiary workshops, further to the accompanying exhibition,” GOIC said.
Its figures showed the GCC petrochemical industry has grown at an average five per cent between 2000 and 2007 as most member states have embarked on new projects or expansion of their existing facilities.
Cumulative investment in the GCC’s petrochemical industry has exceeded $70 billion, accounting for nearly 60 per cent of the total Gulf manufacturing investment of more than $118bn (Dh433bn) at the start of 2007. Besides petrochemicals, the GCC industries include mainly aluminum and other metals, building materials, foodstuffs, machinery and other light products.
Massive investments in the manufacturing sector have sharply boosted the GCC’s industrial exports and turned this sector into the second largest component of the gross domestic product after oil in most members.
“The petrochemicals industry is considered among the dynamic industries due to the multiplicity and density of its products and complexions as well as its wide rage of applications in the different fields of modern life,” GOIC said.
“This conference provides the opening for GCC member states to restructure their processing industries in a way that helps them achieve more integration, interrelation and balance, thus providing it with more endurance and competitiveness in global markets.”
The report expected at least $40bn (Dh146bn) to be invested in the GCC until 2010, allowing the region to become one of the world’s top chemical producers.
“For example in Ethylene, one of the fundamental Petrochemical products, half the world’s capacity growth in the next five years will be concentrated in the Middle East. As a result, by 2010, Ethylene production from Iran and the GCC member states will double to 20 per cent of total global capacity,” it said.
“On the other side, sustained economic expansion, led by the rising demand from China and South East Asia, has driven up costs for raw materials and equipment. As a result, the sector is competing harshly with other growing sectors of the global economy to attract human resources and inputs, crucially needed for the new infrastructure projects.
“Emerging climate change concerns are dictating policy. A response for the GCC involves efforts to boost innovation through research, application of lower-carbon technologies, and a clear regulatory response, which would encourage the efficient use of resources.”
GLOBAL ROLE OF GCC
The petrochemical industry has changed drastically over the past 10 years. The GCC is well placed to double its share of the global market. Technological advances upstream and downstream, changes in transport efficiency and environmental friendly fuels will drive changes.
Notable measures are under way in the gas-to-liquid gas-to-olefin, methanol-to-olefin plants.
The financial sector in the GCC is still stuck in traditional commercial lending practices. It would be desirable to increase the sophistication of the financial institutions through a bold deregulation programme. Project evaluation, risk management, corporate governance and accounting practices also need to be
Decisions made by consumers and governments in Europe, the US, Japan, and China over environmental standards will set the stage for the industry.