Bahrain booming

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GPIC uses natural gas, which is readily available in Bahrain, as a feedstock for the annual production of 1.4 million tonnes of ammonia, urea and methanol.

Abdul Rahman Jawahery, CEO of Gulf Petrochemical Industries Co reveals that Darwinian principals govern his ethos for success.

Abdul Rahman Jawahery is a man in a buoyant mood. Whilst industry headlines read doom and gloom, his jovial manner and air of optimism are a refreshing break with the norm.

Yet responsibility weighs heavy on his shoulders. Sitting at the helm of one the region's largest downstream companies, as the CEO of Gulf Petrochemicals Industries Co (GPIC), he has the job of steering a ship owned in equal part by the Government of the Kingdom Bahrain, Saudi Basic Industries Corporation (SABIC), and Petrochemical Industries Company (PIC), Kuwait. And it is stormy weather looming on the horizon.

"There isn't a single person or organisation who can realistically say they haven't been affected by the financial fallout from the banking crisis, just to different degrees," he explains.

"Even if we as a company have not been substantially affected, then our customers, our suppliers, our bankers, they have been affected. The art is knowing how to survive the downturn."

Jawahery is quick to point to historical precedent to dispel the myth that regional petrochemical companies operate in a benevolent microcosm awash with feedstock and have it easy.

"We've known tough times, extremely tough times here, and it's important not to lose perspective of the toughness that local firms have acquired. I'm confident that one of the crucial factors that will contribute to the success of petrochemical companies in the Middle East is that we have a resilience which is not to be underestimated. We've seen two wars, oil prices dropping below $10 and weathered many shocks to the system over the years."

The company is at the forefront of the regional petrochemical scene, and is one of the largest regional manufacturers of basic petrochemicals and fertiliser. GPIC uses natural gas which is readily available in Bahrain as a feedstock for the production of 1.4 million tonnes of product.

The production split is roughly made up of 1200 tonnes daily of ammonia (400 000 tonnes annually), 1700 tonnes daily of urea (600 000 tonnes annually) and 1200 tonnes of methanol (400 000 tonnes annually).

In the course of the last twenty years Jawahery says that the company and its shareholder have learnt to deal with everything from spiralling boom times, through market volatility and global recession.

"Even in the good times we've not been extravagant. I remember when ammonia was sold at $30 a tonne, when our costs were $70 - $80 per tonne. Because of this we have a very trim, efficient, well oiled organisation that has been able to survive since our inception in the late 70s, and I'm absolutely positive we'll weather this financial storm too."

Near future

Jawahery says that although GPIC will actively seek to keep costs to a minimum, it will not be changing its operational budget for 2009. "We've already presented our projections to the board, and our expenditure was already at the optimum efficient level.

We are debt free and cash rich, so it's a tough period, but we're very well placed to deal with the current situation."

GPIC has distributed over $1 billion in profits directly back to its shareholders in the last seven years alone, and Jawahery estimates the average rate of return has averaged around 150% of paid up capital per year from the turn of the century.

"We certainly have an expansion plan. Any organisation with our success record is going to want to build on that, and our shareholders remain ambitious. Because of our position of strength I'm confident that for all the expansion plans we have, we have a strong capability to finance ourselves, or if it exceeds that, then GPIC is a very strong proposition for banks looking for low risk financing."

Food for thought

Jawahery is the chairman of the technical committee for the international fertiliser association, and a board member of the Arab Fertiliser Association.

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