Gulf Cooperation Countries (GCC) will continue to rely on foreign agriculture for food security despite significant investments made by regional fertilizer companies.
Dr Abdulwahab Al Sadoun, Secretary General of the Gulf Petrochemicals and Chemical Association (GPCA) said that fertilizer companies in GCC countries were investing a total of $10 billion (Dh36.730 billion) in current or planned expansion and planned projects.
He said that these projects would significantly enhance capacity however the lack of water supply within the region meant that food security would be dependent on foreign agriculture for the foreseeable future.
Speaking at the fourth annual GPCA convention in Dubai on Monday, Al Sadoun said that GCC-based companies will add close to 75 million tonnes of nitrogen and 6.8 million tonnes of phosphate rocks to capacity by 2017.
Phosphate rock is the raw material used to manufacturer most commercial phosphate fertilizers.
GCC-based companies, including Abu Dhabi-based Fertil, Qatari-based QAFCO (Qatar Fertilizer Company), and Saudi Arabian-based Sabic who were all present at the convention, are set to increase their global Urea market share by seven per cent by 2017.
Urea is most commonly used in fertilizers as a source of nitrogen.
Expansion plans and increasing demand from nations in Latin America, Sub-Saharan Africa, and Asia forecast that GCC-based companies increase their market share of global urea exports to 36 per cent by 2017.
GCC countries currently account for 29 per cent of global urea exports.
Charlotte Hebebrand, Director General of the International Fertilizer Association, said that the East Asia, South Asia, and Latin American will account for 26 per cent, 25 per cent, and 22 per cent respectively for global increases in fertilizer demand.
All together she said, fertilizer demand is expected to reach 195 million tonnes by 2017-2018.
Despite the opportunities there remained significant challenges for global fertilizer players including fluctuating markets and geopolitical risk in the Middle East North Africa region.
She said that GCC countries were well placed to face the challenges due to strong support by respective countries, however the significant demand on gas resources for utility generation would drive costs up for the fertilizer industry.
Other challenge before the industry is the rise in shale gas from the US market. Al Sadoun said that this would have an impact on the international industry but he believed the maturity and development of the GCC-based companies would withstand the US shale gas impact.
Khalifa Al Sowaidi, CEO of QAFCO, and Chairman of GPCA Fertilizer Committee, said that it was important that regional companies increase cooperation with one another. He said this would enable GCC-companies to grow strongly and adapt easier to market conditions.
