Abu Dhabi-UAE: 5 October 2011 – In a series of recent interviews, chemical industry insiders and independent experts shed some light on things to come for the Middle East petrochemical and fertilizer industries in 2012 and beyond.
The downstream conversion industry will play an increasingly significant role in diversifying the hydrocarbon resources of the GCC and creating new job opportunities for local populations, commented Dominica Andrews, Project Director of the Middle East Chemical Week. In order for the region (Middle East) to fully establish itself as a world dominating petrochemicals and downstream hub, demographics, technology, innovation and sustainability are critical to long-term success as illustrated through Middle East Chemical Week speakers and participants in the run up to the highly anticipated event.
Downstream specialist George Hanna, President of HIPRO Consulting, said: “I do predict a good 2012 for the plastics downstream converters - with more investment by foreign and local producers, more joint ventures (JVs) between foreign and local companies and the development of new applications in the region.”
Hanna continued: “Local and plastic converters have the necessary management and capabilities to tackle the region’s imports. As a result, both local and foreign investments into this region’s sector will increase consistently to support both domestic and overseas demand reducing its foreign dependency (on imports).”
Zacks Investment Research reports that chemicals are nearly a US$3 trillion global business. A crucial component affecting chemical demand is the ‘Baby Boomers’ segment. This is the largest spending market segment in the West, and is projected to have a higher tendency to save in the future. This tendency will significantly affect demand pushing it to a ‘New Normal’ according to chemicals and the economy guru Paul Hodges, who successfully predicted the 2008 financial crisis.
With regard to building a sustainable downstream industry, Paul Hodges, Author of ‘ICIS’ Chemicals and the Economy blog, and Chairman of International eCHEM, said: “It needs to continue in the current direction, but with keeping a close eye on likely changes in demographics, supply/demand balances and cost curves so that it remains focused on growth areas with profit potential.”
Newer technologies would assist in securing major cost savings, producing higher product quality and reducing waste, he added.
Dr. Ramesh Ramachandran, President and CEO of MEGlobal, reiterated Paul Hodges’ statements emphasizing the need to invest in operational excellence. Quality matters, he added.
“The new wave of technology and customer needs is focused on sustainability. Customers and consumers are not willing to buy from just any supplier. Reputation matters,” said Dr. Ramachandran. “The next wave has to be the investment in ‘home grown’ technology for new products. Unless innovation in chemistry, end use and market research occurs within the region, the GCC will remain dependent on JVs to grow. The JV model has a long but finite lifetime. At some point, the GCC has to innovate for the world since it is blessed with the largest amount of feedstock to be upgraded for use by the rest of the world.”
In the fertilizer industry, the United Nations Food and Agriculture Organization estimates that global population will increase to 9.2 billion by 2050. This statistic produces a compelling opportunity for the global fertilizer industry to grow. Technological innovation will play a key role to enhance the competitiveness of the Middle East’s fertilizer industry, especially with nitrogen, which is the most hydrocarbon intensive fertilizer sector.
Oliver Hatfield, Director, Fertilizers, INTEGER Research, said: “There is a great deal of potential that could come from the development of coal gasification to produce synthesis gas. This could open up opportunities for building new nitrogen facilities in coal-rich locations.”
Oliver Hatfield is one of over 50 industry experts speaking at the upcoming Middle East Chemical Week which for the first time features a Gasification Innovation Workshop on 16 October led by GE, a major player in the gasification space to address this growing need.
With regard to trends in the fertilizer industry in the near future, Hatfield said: “The nitrogen industry will remain upbeat through 2012. Crop prices are unlikely to unwind much before then. The challenge thereafter will be absorbing substantial new nitrogen capacity.”
Chemical industry insiders and independent experts including George Hanna, Paul Hodges, Dr. Ramesh Ramachandran and Oliver Hatfield will gather next month to address the key factors driving and potentially inhibiting growth in the Middle East petrochemical, downstream conversion and fertilizer sectors.
The Middle East Chemical Week will be held at the Abu Dhabi National Exhibition Centre (ADNEC) in Abu Dhabi, UAE, from 16 – 19 October 2011. This annual event includes the 6th Annual Petchem Arabia Conference, 4th Annual Middle East Fertilizer Symposium and Technology Innovation Exhibition running alongside.