MIDDLE EAST
Low oil price to accelerate push for diversity With oil prices widely tipped to stay around $60 per barrel or lower for the next few years, the low-cost-energy advantage enjoyed by the Middle East’s chemical sector will continue to evaporate, experts say. As this scenario becomes the new normal, many Middle Eastern chemical companies see 2018 as the year they must shift faster away from basic petrochemicals and toward higher-value specialty products. “One thing we know for certain: The status quo is not an option,” Yousef Al-Benyan, chairman of the Gulf Petrochemicals & Chemicals Association and CEO of the big Saudi firm SABIC, told delegates at the GPCA Annual Forum late last year. “The fundamental change required to deliver a quantum leap in performance is transformation; it is not an incremental improvement.” In addition to the low price of oil, challenges the region faces include lower
Sadara by the numbers ▸ 6 years: Time it took to construct Sadara, a joint venture between Dow Chemical and Saudi Aramco ▸ 3 million metric tons per year: Amount of chemicals and plastics being produced at the site ▸ 26: Number of plants at the site ▸ Sept. 17, 2017: The day Sadara commissioned its final plant, a toluene diisocyanate facility ▸ 160,000 metric tons: Amount of steel needed to construct the site ▸ 2,500 km: Length of piping at the site Source: Sadara
Middle East chemicals by the numbers ▸ 6%: Share of global production, up from 3% in 2000 ▸ 102: Number of products being made ▸ 159 million metric tons: Production, up 8.5% since 2015 ▸ $91 billion: Sales, down 3% since 2015 ▸ $584 million: R&D spending, down 20% since 2015 ▸ 49%: Share of Gulf production attributable to Saudi Arabia Note: Figures are for 2016 Source: GPCA
profit margins, China’s rise to self-sufficiency, and the shale-enabled chemical expansion in the U.S., Al-Benyan said. Using mergers and acquisitions is one way Middle Eastern companies could improve their difficult position, says Mirko Rubeis, a managing director of Boston Consulting Group. He says companies in the Gulf Cooperative Council region— which includes the lion’s share of the Middle East’s chemical industry—should strive to focus their portfolios in areas such as specialty chemicals while reducing costs through economies of scale. It’s a view echoed by H. E. Khalid A. Al-Falih, Saudi Arabia’s minister of energy, industry, and mineral resources and chair of Saudi Aramco. Speaking at the GPCA forum, he called on regional players to think —Yousef Al-Benyan, chairman of the Gulf Petrochemicals & Chemicals Association (GPCA) globally and on governments to adopt policies that encourage venture capital investment and greater spending on R&D. Dow Chemical and Saudi Aramco point to their Sadara Chemical Company joint venture as an example of how to integrate the Middle East’s basic chemicals prowess with high-end production of specialty materials. Last year, Sadara started up a polyurethane raw material plant at its complex in Jubail, Saudi Arabia. It is the last of 26 facilities to be commissioned at the $20 billion site. A raft of downstream facilities—such as a plastics processing plant—are now being built nearby. Rejecting the downbeat outlook of others producing chemicals in the Middle East, DowDuPont executive chairman Andrew N. Liveris has pledged that he will continue to make specialty chemical investments in the region. For Liveris, at least, the Middle East is still a land of opportunity.—ALEX SCOTT
“The fundamental change required to deliver a quantum leap in performance is transformation; it is not an incremental improvement.”
JANUARY 8, 2018 | CEN.ACS.ORG | C&EN
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