Persian Gulf Region to Invest $55 Billion as Global Hub for Plastics Development

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Written by Richard Finlayson, Senior International Editor for Industrial Info--Prior to this week's Gulf Petrochemicals & Chemicals Association (GPCA) summit in Dubai, Muayad Al-Faresi, the vice chairman of the plastics committee, said that the global petrochemical industry is worth more than $600 billion and that in 2010, the Persian Gulf region had an 11% stake in the sector, worth more than $50 billion per year. He added that within the next five years, that stake is expected to increase to 17% of the global total, which demonstrated the critical importance of the industry as the second-largest source of income for Gulf nations.

Other industry reports estimate total world production at 700 million tons, with the region currently having a 16% stake that will grow to 20% by 2015. Al-Faresi said that the annual per-capita plastic consumption in the Gulf is five kilograms, compared to 90 kilograms per year in the U.S. and 65 kilograms in Europe.

Dr. Abdul Wahab al-Sadoun, the GPCA secretary general, said that the Gulf has become the centre of gravity for exports of plastics raw material. By 2015, the production of polyethylene, polypropylene, polyvinyl chloride (PVC) and polystyrene in the region will double to more than 23.6 million tons per year. When compared to the 2010 total of 13.5 million tons per year, this shows a massive increase of 75%. Al-Sadoun said that the total sector growth predicted would require $55 billion in investments over the next five years.

On the first day of the summit, Ziad Al-Labban, the chief executive officer of Petro Rabigh, which is a joint venture between Saudi Aramco (Riyadh, Saudi Arabia) and Sumitomo Chemical (OTC:SOMMF) (Tokyo), said that 50% of global oil reserves and 40% of world gas reserves came from the region and neighboring countries. The growth opportunities for the plastics industry were demonstrated by a ratio of global petrochemical production to hydrocarbon resources.

The Persian Gulf is positioned between current and future large plastics demand centers; with a close proximity to these markets and a hydrocarbon resource base, the region has the ingredients to make it a hub for plastics development. Al-Labban said that the Gulf Cooperation Council (GCC), which includes the United Arab Emirates (UAE), Bahrain, Saudi Arabia, Oman, Qatar and Kuwait, would benefit from the resource base in four areas: optimizing the use of technology; enhancing research and development initiatives and programs; creating business opportunities; and developing human resources. Al-Labban then listed international partnerships and technology licensing arrangements that are being used to enhance production capabilities in the region. These included Saudi Aramco; Dow Chemical Company (NYSE:DOW); Borouge; Qatofin, which is a joint venture between Qatar and Total S.A. (NYSE:TOT) (Paris, France); and a joint venture between Qatar Petroleum and ExxonMobil (NYSE:XOM) in Ras Laffan Industrial City.

The GPCA reported that Saudi Arabia produces about 50% of the region's total petrochemical output; Iran 27%; Oman and Qatar 5% each; the UAE 3%; and Bahrain 1%. The 3.4 million tons per year produced by the UAE is expected to more than double to 7.8 million by 2015. Iran is planning to up production to 41.9 million tons per year, and Saudi Arabia plans to up production from the current 53.2 million to 70 million tons per year in the same period.

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