Madrid-based refiner Cepsa plans to boost petrochemical sales to Asia because it’s the only major region to buck a global trend of slowing growth, the company’s chief executive officer said.
Rising populations and incomes in India, China and Southeast Asia, will increase the use of refined products and of the chemicals that go into consumer goods, according to the Abu Dhabi-owned company’s 2030 energy outlook published this week.
“Growing in Europe is almost impossible,’’ Pedro Miro, CEO for the oil processor known officially as Cia. Espanola de Petroleos SAU, said in an interview in Abu Dhabi. “Competition is there, and the market is being permanently eroded.” Producers of fuel and chemicals will have to focus instead on selling in Asia, he said Tuesday.
Middle Eastern petro-states are investing in downstream industries to ensure future use of their oil. Consumer demand for telephones, computers and cars requires more of the plastics made from petrochemicals, even as better energy efficiency and new technologies such as electric vehicles are affecting use of transport fuels.
Cepsa and Abu Dhabi National Oil Co. signed an initial deal to study a project to manufacture a chemical used in detergents, planning to market the feedstock in Asia and the Middle East, the companies said Wednesday in an emailed statement.
Cepsa is wholly owned by the Abu Dhabi government’s Mubadala Investment, a holding company that’s reviewing assets after its creation from a merger of two investment vehicles. Miro, who spoke during an energy conference in Abu Dhabi, said he’s confident that Cepsa’s business of operating refining and chemical plants will fit with Mubadala’s strategy.
Other crude producers in the region are pursuing a similar investment approach. Saudi Arabian Oil Co., the world’s biggest oil exporter, is in “serious discussions” over refining investments in China and will expand refining capacity from 5 million barrels a day to 8 million to 10 million barrels, CEO Amin Nasser told reporters at the same conference.
Abu Dhabi’s Adnoc plans a 600,000 barrel-a-day integrated plant that its CEO, Sultan Al Jaber, said will expand capacity by 60 percent.
“In areas where the market is growing, there’s no doubt that we are going to have competitors,” Miro said. However, “the room for manoeuvre is much larger” in such countries, he said.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.