Currently the region's petrochemical output is worth $40 billion.
The annual mega event of the regional petrochemical industry got under way with a call by SABIC CEO Mohamed Al-Mady to revert to a free trade environment and capitalize on the overall better outlook of the global economy.
With a virtually packed hall at the Dubai Festival City Intercontinental Hotel, and every one of who is who in the regional industry in attendance, Al-Mady, in his opening remarks as the GPCA chairman, highlighted the improving global economic environment. With little or no talk of double dip recession and margins and outputs improving, the industry is much more confident today than last December, he conceded. Yet he cautioned that though the overall outlook today is better, issues such as currency war and the increasing protectionism in some of the countries remain a threat to the growth and development of the industry.
Referring to the recent imposition of protective tariff by India on plastic products from the region, Al-Mady said: "We need to advocate a free global trade regimen."
The old and wise man of the industry, Abdul Rahman Zamil in a conversation with this correspondent too emphasized on the importance of getting removed the recently imposed tariff by India, underlining he has been speaking openly against the move by New Delhi.
Highlighting "the role of petrochemicals in the economic development of the GCC," Sheikha Lubna Al-Qassimi, the UAE minister of foreign trade, told the audience that while the global economy shrank by 4.6 percent last year, the regional petrochemical industry continued to grow. Last year the GCC added four million tons of ethylene, the building block of petrochemicals, she emphasized.
With nine new crackers projected to be installed in the GCC over the coming years, Sheikha Lubna said that the regional share in the global ethylene capacity will go up to 20 percent by 2015, accounting for 25 percent of the global production. The region remains committed to free trade, the UAE minister stressed in her key note presentation, indicating the sensitivity of the region on the issue.
Saudi Aramco CEO Khalid Al-Falih, in his presentation emphasized the pivotal role of petrochemical sector in the region. With the region endowed with proven crude reserves in excess of any other region and a quarter of global gas resources, he urged the industry to pull its weight on the global scale. In order to generate good, paying employment for its youth, the region needed to diversify the product slate. With the global chemicals trade standing at $3.5 trillion, the share of the region could easily go up if the resources are properly tapped. Development of industrial parks in the region is the cornerstone of this strategy, Al-Falih underscored several times. Underlining, the importance of growing integration and cooperation in the region, he said, "we should think of the entire Gulf as a mega cluster and integrate at the regional level."
However, in order to grow and be able to compete with other parts of the world, Al-Falih who runs the world’s most integrated energy company advocated greater reliance on research & development. So far we have been relying on licensing, but in order to grow and meet our aspirations, the region needs to become a leader in R&D too.
In order to achieve this, the region needs to put emphasis on human resources in all sectors — from science and technology to engineering and management.
In order to take a leap ahead of other regions, a decade of constant work is required, he clarified. For this to happen, the region will have to begin spending five percent of the revenues on R&D from the current investment of 0.5 percent.
He lamented that today the number of true R&D scientists throughout the region doesn’t exceed 500. This needs to be multiplied by a factor of 15 over a two-decade period. Only then the ambitious target of turning the regional economy into a knowledge-based economy could be fulfilled, the Aramco CEO underlined.
Later responding to a question from this correspondent, Al-Falih conceded that some of the feedstock advantage that the resin industry currently enjoys needs to be passed on to the downstream plastic industry in order for it to play its required role in the regional economy.
Christian Jourquin, the CEO and the chairman of the Executive Committee of Solvay, emphasized that the chemical industry needs to meet future challenges, including that of the expanding global population and its aspirations. By 2050 the world would have nine billion people, up from the current over 6 billion, and the new resources are required to meet the needs of this growing population. This could only be met through innovation. Otherwise the Malthusian theory may come into play, Jourquin warned.
Axel Hetimann, chairman of the Board of Management of Lanxess, highlighted the success the company had while employing innovation.
And the emphasis of the talk by Francois Cornelis, vice chairman of the Executive Committee of Total, was on innovation in petrochemicals. He specifically highlighted the Solar Impulse project, emphasizing that the chemical industry is the enabler of change, resonating with what Al-Falih had earlier said.
