By Abdelghani Henni
Boosting revenues and delivering stability in a rapidly expanding regional downstream market dominated discussions at the first Middle East Chemical Week.
More than 200 delegates from 20 countries participated in the
first Middle East Chemical Week conference and exhibition which was held in the
Gulf Hotel in Bahrain, under
the patronage of Dr. Abdul Hussain Bin Ali Mirza, Bahrain’s Minister of Oil and Gas affairs,
and chairman of national oil and gas authority.
This is the first time that the annual Petchem Arabia Conference
and the Middle East Fertiliser Symposium have come together and the organisers,
the World Refining Association, have claimed the move to be a major success.
Speaking during the inauguration session, Dr. Mirza highlighted
the importance of the petrochemicals and the fertiliser industry in the region,
and its contribution to the world’s petrochemical industry. “Up to US$50 billion
is being invested currently in oil and petrochemical ventures in the GCC states,”
said Dr Mirza. “GCC states’ output of the petrochemical products, this year, would
amount to 20% of the global production,” he added.
He also shed some light on a series of identical projects aimed
at expanding the Bahraini energy sector.
Dr. Alaa Nassif, general manager for strategic planning and investment
at the Royal Commission for Jubail and Yanbu delivered a presentation highlighting
opportunities for sustainable industrial development in Saudi Arabia’s Madinat
Yanbu. Both Jubail and Yanbu have been conceived to deliver close knit downstream
communities and are seeking investors.
Global factors impacting the region’s petrochemicals industry
was one of the main subjects discussed during the conference. Dr. Christian Gunther,
partner at Mckinsey and Company said that the chemical and petrochemicals industries
are pillars of GCC economies and society. “The industry faces significant challenges,”
he said. “GCC chemical and petrochemicals companies need to adapt their strategies
according to the governmental aims.”
“The GCC has positioned itself rapidly on the petrochemical world
landscape, with strong profitability,” he added. This leading position increased
the contribution of these companies in the GDP of the majority of GCC countries.
“Petrochemicals producers contribute to GDP through direct, indirect
and induced effects.”
Direct contribution is through net profits, wages and taxes,
while indirect contribution is via the suppliers of the industry. “The induced contribution
is made via spending of dividends, taxes and wages in the country’s economy,” he
But even with this rapid growth, the industry in the region faces
several challenges. “From a market perspective, the GCC is not a natural location
to produce chemicals. The market here is small, as the share of the GCC in global
petrochemical consumption is only 3%, while the production is 6%,” he said.
Dr. Gunther explained how the decrease
in the region’s ethane availability has forced producers to use naphtha as an alternative
feedstock which costs more and is less competitive.
The conference was an opportunity for producers to explain their
perspective on the impact of new capacities coming on stream, along with the IOCs’
perspective on the fast changing world and petrochemical industry. “The Middle East
and Asia will account for 70% of global capacity
growth by 2015,” said Ahmed Albassam, vice president, business development, at National
Industrial Company (Tasnee). “Thirty percent of the capacity will come from the
GCC countries plus Iran,”
he said. “Meanwhile, Western Europe will continue
to see lackluster growth, with basic chemicals and plastics growing less than GDP
at about 1.7%” he added.
Asian markets will remain the main destination for Middle Eastern
producers. “Asia and mainly China’s
appetite for basic chemicals and plastics is unabated, it has shown immense resilience
during tough times,” he explained. “India
also has a robust growth rate in basic chemicals and plastics with a strong GDP
growth along with diversity in growth and increased foreign investments, these factors
will sustain the high growth rate in India,” he said.
Albassam said that the Middle East
will witness the growth of selective intermediate and downstream industries on a
combination of competitive export economics, proximity of sizable markets and favourable
demographics. “Robust demand from major projects in infrastructure and consumer
items will also help in this trend,” he said.
The afternoon session focused on key projects and developments
in the GCC and North Africa regions. The session began with a joint case study presentation
by the Energy Cities Development Company chairman and executive director, Dr. Abdullah
Mahmud on the progress on the US$54bn project in Libya. “The project was originally due
to break ground in 2009, but schedules have slipped and the first petrochemical
production units will now begin production in three year’s time,” revealed Dr. Mahmud.
The session concluded with a case study presentation by Borouge’s Innovation Centre
Manger, Dr. Petri Lehmus on the $70m investment in equipment and facilities.
Mohammed Nasser Al-Hajri, downstream business development and
evaluations manager at Qatar Petroleum, in his presentation entitled “the future
of the petrochemicals industry in an increasingly tight gas region” said that Qatar is the only country in the Middle East which counts only on ethane in its projects. “One
hundred percent of our projects are based on ethane feedstock, compared to 74% in
other GCC [countries] and Iran
and only 26% in the rest of the world,” Al-Hajri said. “Propane and butane are also
used at 9% of the projects in the GCC and Iran, along with the utilisation of
naphtha and NGL,” he aded.
Al-Hajri urged regional producers to be ready to meet the increasing
challenges related to the mixed feedstock projects. “These projects will have a
higher CAPEX and greater operational complexity,” he observed. “Parallel developments
and additional capacities in the Middle East and Asia
will also represent a challenge, along with entry barriers and volatility in energy
markets and pricing.”
“Increase your profit, flexibility and stability” was the title
of the presentation by Youssef Bounouhi, director of the Middle
East region at Süd-Chemie, where he highlighted the next generation
of acetylene hydrogenation catalysts. “Plant operators should assess the principals
of selective hydrogenation, along with the front end and tail end selective flow
schemes,” he explained. “Of course this is by choosing the right type of hydrogenation
catalysts for front end and tail design,” he added.
The presentation by Bounouhi was attended by plant operators
of SABIC’s subsidiaries and Equate Petrochemical and other regional companies, it
was an interactive session between the interlocutor and the attendees, who raised
the issues they face mainly with changing the catalysts. The session was an opportunity to learn from different
experiences and to share thoughts and solutions. One of the delegates said that
his company changes catalysts once every eight years, while the average time to
change the catalysts is five years.
In addition to Süd-Chemie, Haldor Topsoe and Johnson Matthey
Catalysts provided separate seminars for their clients explaining the latest developments
of the catalysts industry and showcased their products along with case studies of
innovative catalysts applied in major downstream processes.
“Having the key technology providers in one room, covering topics
related to our industry made this Symposium very worthwhile,” said Ahmed Al Awfi,
Deputy CEO, Oman India Fertilizer Company.
“The sharing of views on the
future of petrochemicals in the region gave us a great insight into what key decision
makers are thinking,” concluded Andy Gibbins, senior VP, manufacturing, International