Sector News

Middle East: Diversification and M&A in full swing

November 21, 2018
Chemical Value Chain

The chemical industry of the Middle East is undergoing seismic changes. Chief among them is the proposed acquisition by state-owned Saudi Aramco of SABIC, the largest chemicals producer in the region and one of the leading industry players worldwide.

A shortage of advantaged gas feedstock has led producers to switch attention to building liquid or mixed-feed crackers and toward geographical diversification. The recovery in the price of oil will clearly benefit the region, the world’s main producer and exporter of crude. Meanwhile, a decision by US President Donald Trump to cancel the 2015 JCPAO nuclear deal with Iran has led Western firms, such as Total and Shell, to withdraw from that country.

The Gulf Cooperation Council (GCC) states, consisting of Bahrain, Kuwait, Oman, the United Arab Emirates (UAE), Qatar, and Saudi Arabia, continue to focus on long-term initiatives to diversify their economies and reduce their dependence on oil. Abdulwahab al-Sadoun, secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA; Dubai) says that to ensure a steady and sustainable supply of chemicals, the GCC industry must invest in innovative technologies, intensify the move toward consolidation to build critical mass, and integrate its refinery and petrochemical operations to maximize the value of the crude oil barrel.

Sadoun says that with reduced ethane availability in the Arab Gulf region, liquid feedstocks are creating new opportunities to stay competitive by ensuring long-term feedstock availability and allowing companies to make a wider range of products. “Product differentiation is important in a highly competitive industry and can help create higher value through the development of related products such as aromatics. Particularly in Saudi Arabia, a dominant exporter of LPG, significant opportunities exist to develop LPG as a feedstock, which could play a key role in securing the long-term competitiveness of the kingdom. However, growing the use of liquids in the GCC chemical industry’s feedstock mix would require increased refining-petrochemical integration, a trend that has increasingly been gaining pace over the past years,” Sadoun tells CW.

> Read the full article on the Chemical Week website

By Natasha Alperowicz

Source: Chemical Week

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