The Middle Easts fertiliser sector has almost doubled in size over the last decade driven by the availability of competitively priced gas feedstock, yet is set to expand further through major projects in Saudi Arabia, Qatar and Bahrain.
The six-nation GCC has an estimated 31.7 million tonnes a year (t/y) of fertiliser capacity in 2013, compared with 20 million t/y three years ago and just 16.6 million t/y in 2005. The vast majority of fertiliser capacity added in the GCC has been nitrates; one of the three main groups of fertiliser along with phosphates and potash.
For nitrate fertilisers the supply and price of gas feedstock is the number one factor in determining the competitiveness of an operation. However, gas supplies have come under pressure in the GCC as demand grows for use in the expanding power and water sectors.
Director-general of the Gulf Petrochemicals & Chemicals Association (GPCA), Abdulwahab al-Sadoun, has warned the GCC fertiliser sector to expand into phosphates to withstand feedstock challenges. GCC producers must diversify their fertiliser portfolio to include more phosphate fertilisers, as this will decrease their reliance on hydrocarbon feedstock and grow their share of export markets, says Al-Sadoun. Phosphate fertilisers require less natural gas to produce and are a relatively untapped resource in this region.
The question is how much potential is there in the GCC and the wider Middle East and North Africa (Mena) region for phosphate fertiliser expansion? Nitrate-phosphate fertiliser operations producing monoammonium phosphate (MAP) and diammonium phosphate (DAP) require a constant supply of phosphate rock. The distribution of phosphate rock reserves in the Mena region means that GCC countries, with the exception of Saudi Arabia, are at a significant disadvantage in phosphate fertiliser production.
Although the Mena region houses 80 per cent of the worlds phosphate rock reserves, they are distributed unevenly. According to the US Geological Survey, 73 per cent of the worlds 67 billion tonnes of known reserves is located in Morocco and Western Sahara with another 3 per cent in Algeria.
This leaves smaller amounts spread across Egypt, Iraq, Jordan, Saudi Arabia, Syria and Tunisia. With production in Menas second-largest producer, Jordan, stagnant over the past decade and other countries struggling with political instability and a lack of investment in industrial projects, Saudi Arabia is currently the only expanding phosphate producer in the region outside of Morocco.
Saudi Arabias $7bn Waad al-Shamal Phosphate City development will add 1.5 million t/y of phosphate rock capacity, nearly doubling the kingdoms mining capacity to overtake Algeria, Egypt and Syria. Success in Saudi Arabia could set the precedent for other gas and mineral-rich Mena countries to expand in a sector with strong long-term growth prospects.
|World phosphate rock reserves and production, 2012|
|Country||Production (thousand t/y)|
|Morocco and Western Sahara region||28,000|
|Morocco and Western Sahara region||50,000|
|t/y=Tonnes a year; na=Not available. Source: US Geological Survey|