Gulf to account for 15% of global ethylene production by 2020

Dubai: The Gulf is set to take a leading role in the global petrochemical industry by increasing its production of ethylene to 15 per cent by 2020, latest figures show.

In Gulf states, more than 10 million tonnes of ethylene was produced in 2007, or nine per cent of global production. This figure is expected to hit 15 per cent in 2020. Saudi Arabia leads with seven million tonnes.

Middle Eastern countries as a whole share 11 per cent of global ethylene production capacity. This figure will stretch to 22 per cent by 2020, with the Gulf sharing a healthy 65 per cent.

Rafat Al Suweimal, head of economic analysis for the Gulf Organisation for Industrial Consulting (GOIC), was optimistic about the future of petrochemicals in the region.

"The GCC really has a chance to compete because of three competitive advantages: Location which is very important for GCC countries. Shipping - it's much cheaper to ship to Asia from here than the US or Europe. And finally, infrastructure. We're directly on the sea," he said.

Major facet

The petrochemical industry is a major facet of the Gulf economy. Currently, the US, Europe and Japan dominate world markets, although additional capacities in Canada, Saudi Arabia and southeast Asia account for more than half of the world's production.

Al Suweimal said: "The UAE plans to be one of the biggest players, like Qatar Petroleum in Qatar, by being selective. It's important to stay away from basic petrochemicals like ethylene and move downstream. Abu Dhabi has an integrated plan to not just produce basic petrochemicals."

Kate Dourian, editor of Platts Middle East, however, is doubtful the UAE will become a major contender in the world's petrochemical industry. "The petrochemical market is dominated by the likes of Saudi Arabia and also Qatar, which has enormous amounts of gas. And there's Iran in the future. There is no point in trying to compete."

Abu Dhabi currently has 98.2 billion barrels of proven crude oil reserves, accounting for 94 per cent of the UAE's total. But latest figures show the UAE currently exports 62 per cent of its crude to Japan and another 20 per cent goes to other Far Eastern markets.

GCC industry ministers will gather in Abu Dhabi for the 11th Industrialists Conference on January 20 and 21.