Gulf Petrochemicals is rapidly turning to the downstream sector

According to the latest statistics, the supply of petrochemical products in the Gulf region currently accounts for about 10% of the global total. It is expected that 50% of the new petrochemical production capacity in the world will be concentrated in the region in the next few years. However, due to the growing shortage of petrochemical raw materials and low value-added products, the petrochemical industry in the Gulf region is rapidly shifting to the downstream sector.

Because the Gulf countries supply natural gas to domestic petrochemical enterprises at a relatively low price, the cost of raw materials for the petrochemical enterprises in the Gulf region is far lower than that of other global competitors. In addition, the advantages of logistics cost are close to major Asian markets, and the petrochemical industry has unique development advantages. The relevant data shows that in the first half of 2011, the price of petrochemical products in the region showed upward trend with the rise of oil prices. Since then, out of fears that the European debt crisis may affect other regions, the demand for petrochemical products in the Gulf region has decreased, and prices have also dropped. However, some experts pointed out that because the main driving force of economic growth comes from emerging market countries, in the long run, the prices and profits of petrochemical products will remain at a relatively stable level.

In the next few years, the Gulf countries will continue to increase investment in the petrochemical industry to increase their competitiveness in the global petrochemical market and meet the dual needs of economic diversification and job creation through the development and construction of large-scale petrochemical plants. According to relevant data, the petrochemical projects currently under construction in the Gulf countries have a value of 19 billion U.S. dollars, and about 81 billion U.S. dollars are in different planning stages. Among them, Saudi Arabia has taken the leading position in the development of the petrochemical industry in the region, with a project value of US$12 billion and an additional US$41 billion of projects under planning. According to estimates from Gulf Petrochemical and Chemical Industry Association, by the end of 2015, the petrochemical production capacity in the Gulf region will reach 113 million tons, of which Saudi Arabia will have the largest capacity increase, and UAE will have the highest growth rate.

At the same time, however, the petrochemical companies in the Gulf region are also facing many challenges. For this reason, the Gulf countries are taking active measures to shift to the downstream industries.

First, petrochemical raw materials are increasingly in short supply and are gradually turning to heavy raw materials. Ethane extracted from associated gas is the main raw material for basic petrochemical production in the Gulf region. However, due to the increasing demand for natural gas from power generation and desalination, the Gulf region is facing the problem of a shortage of ethane raw materials, and the existing raw material supply price is very likely. Raise quickly. At present, the Gulf Petrochemical industry is gradually turning to naphtha, propane, butane and other heavy raw materials. Most of the new petrochemical plants will use non-ethane or mixed materials. This means that the cost of plant construction and overhaul and maintenance will increase, and the cost of production labor using liquid as raw material will also increase.

Secondly, the petrochemical products produced in the Gulf region are mostly basic chemical products, and will be dedicated to the development of high value-added products in the future. At present, most of the petrochemical products in the Gulf region are mostly upstream products of the crude oil and natural gas industrial chain, and are very vulnerable to the impact of crude oil prices and market fluctuations. Therefore, the Gulf Petrochemical Industry is actively transforming its previous model of producing only basic chemical raw materials and then exporting them to other countries to process finished products, continuously increasing investment in R&D, expanding into high value-added downstream industrial chains, and producing special chemicals and plastics. Goods, directly provide finished products or semi-finished products. It is expected that the plastics processing industry in the region will experience double-digit growth in the coming years. For example, Saudi Arabia has indicated that it hopes to promote the further development of the petrochemical industry through the establishment of plastic processing zones, and plans to increase the proportion of sales of specialty chemicals to all products to 30% by 2020.

Third, actively seek overseas mergers and acquisitions and cooperation. As the price of petrochemical products exported from the Gulf region is lower than the local market price, it faces more stringent anti-dumping accusations. To this end, while expanding its local petrochemical production capacity, Gulf Petrochemical Co., Ltd. is also actively seeking overseas mergers and acquisitions and cooperation, especially to strengthen cooperation with emerging market countries in exchange for resources for the market.

In short, the Gulf countries hope to promote the sustainable development of the petrochemical industry in this region through multiple measures.