GCC petrochemical producers must expand downstream into more value-added products to provide sustainable growth for industry, GPCA leader says

LOS ANGELES , December 12, 2011 () – Gulf Cooperation council petrochemical producers must expand downstream toward more value-added products in order to provide sustainable growth for the industry, Adbulwahab Al-Sadoun, secretary general of the Gulf Petrochemicals & Chemicals Association told ICIS news in a Dec. 12 interview.

Al-Sadoun said expansion should be specifically focused on engineering plastics and performance chemicals, ICIS reported.

Factors driving the need to expand downstream include the need to add value to the producer, Al-Sadoun said, as well as the need to create jobs in the region.

At present, the most developed value chains among GCC petrochemical producers are methanol and ethylene. If GCC producers make use of other feedstocks besides natural gas, such as naphtha, they would be able to producer larger amounts of propylene, Al-Sadoun told ICIS. Such a transition will allow GCC producers to expand into more production of aromatics, such as benzene, toluene and xylenes, Al-Sadoun added.

The time is also right for such an expansion because of the demographics of the region's workforce, Al-Sadoun said. For instance, in Saudi Arabia, nearly 48% of the population is about 25 years old, Al-Sadoun said.

A race is likely between the Middle East and Asia toward more value-added products as Asia has already made moves in that direction, but Al-Sadoun warned, countries should refrain from protectionism in the form of tariffs.

Al-Sadoun was likely referring to tariffs recently placed on polypropylene shipments to India from Oman, Saudi Arabia and Singapore.

The primary source of this article is ICIS news, Sutton, England, Dec. 12, 2011.

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