PETROCHEMICALS: Plastic revolution

16 June 2006
By the end of the decade, the Middle East will be well on the way to establishing itself as the main centre of petrochemicals production in the world. Tens of billions of dollars are being pumped into the addition of new capcity and, in many cases, the construction of greenfield facilities exporting to the plastics markets of Europe, Asia and the US (see Major Project Update, pages 48-49).

As this week's Cover Story reveals, concerns are being raised about how to manage this unprecedented expansion (see pages 4-6). The booming industry is providing rich pickings for engineering, procurement and construction (EPC) contractors, for example, but the downside is spiralling EPC costs. Increasingly, clients will be forced to adopt new contracting strategies and ensure competitive bidding (see pages 36-37). There are numerous other logistical hurdles. Ports are dealing with growing backlogs of petrochemical products for export, while shipping lines are rushing to build up new specialist fleets.

The reasons for the boom are obvious. Most of the region's producers benefit from cheap and plentiful natural gas feedstock, which is the driving force behind new projects in Saudi Arabia and Iran, for example (see pages 44-46). Gulf producers of bulk petrochemicals can undercut most competitors on price, even allowing for the distance from the end markets, and many are beginning to explore upstream integration into the refining industry as well as downstream conversion opportunities. But the story is not exclusively about the GCC. Even a country such as Egypt, which has comparatively modest gas reserves, is taking advantage of its strategic location to secure a place in the global petrochemicals market (see pages 46-47).

For a more in-depth look at the petrochemicals industry, be sure to get your copy of the MEED Petrochemicals Information Report, available at the end of June. It includes detailed analysis of the challenges and opportunities facing the global and Gulf petrochemicals market. For more information, email

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