More than 65 executives gathered in London on 25 and 26 September at the MEED conference on petrochemicals in the Middle East. Senior delegates from across the entire spectrum of the industry discussed the challenges facing the petrochemicals sector and the potential risks and rewards for investors.
Andrew Spiers, principal of Chem Systems, outlined the Middle East's growing domination of the polyethylene trade, and the need to penetrate new markets in Europe. Access to ethane, the feedstock for the bulk of the local petrochemicals industry, makes companies in the region ideally placed to exploit rising demand for polyethylene in the next five years, he said.
Controlling 15 per cent of the world's natural gas reserves, Iran will be leading the regional build-up of capacity, according to National Petrochemical Company managing director Mohammed Rahbari. Saudi Arabia is witnessing similar large-scale development, according to Ahmed al-Ohali, president of the Saudi International Petrochemical Company. Like Iran, Saudi Arabia has the advantage of vast supplies of feedstock, which will increase considerably with the introduction of the Saudi gas initiative.
Moayyed al-Qurtas, chief executive of the National Industrialisation Company (NIC), gave an overview of the development of an integrated propylene/polypropylene plant. NIC has formed a partnership with Europe's Basell, whose representative, Siegmar Vetter, outlined the advantages of joint ventures as a way of combining local expertise with the marketing capabilities of large multinationals. Hesham Raafat, managing director of Egypt's Oriental Petrochemical Company, used the example of the company's own polypropylene plant in Suez to demonstrate the attraction of niche markets.
Martin Amison, head of the international division of Trowers & Hamlins, stressed the need for project structures to adhere to local legal requirements. Terry Newendorp, chairman of Taylor-DeJongh, and Mike Parkhouse from Gulf International Bank, explored the issue of financing in greater depth. Newendorp highlighted the role of local bond markets for financing long-term projects, while Parkhouse raised the issue of Islamic finance as an alternative source of funding.
Striking a pragmatic note, Saurabh Nakra of Drewry Shipping Consultants underlined the challenges facing the shipping industry. While there has been a sharp increase in demand for chemical tanker tonnage, freight rates for petrochemicals have to reflect the availability of return cargo, which in turn reflects demand in the Middle East for goods on which shipping companies can turn a profit. Next year's Petrochemicals in the Middle East conference will be held on 24-25 September.
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