The Arabian Gulf petrochemical industry expanded this year but it was hit by the oil price rout and energy subsidy reforms that put pressure on margins.
The year was also marked by announcements from two state-run energy companies, Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco, of plans to nearly triple petrochemical production as part of regional governments’ efforts to diversify their income away from a dependence on crude.
Aramco is seeking to raise production to 34 million tonnes per annum (mtpa) by 2030 from the current 12 mtpa, while Adnoc is targeting an increase to 11.4 mtpa by 2025, up from 4.5 mtpa now.
Petrochemical production in the region this year is forecast to have increased by about 2.6 per cent to 148.4 mtpa from 144.6 mtpa last year, according to the Dubai-based Gulf Petrochemicals and Chemicals Association.
“We anticipate an additional 6.65 million tonnes of petrochemical capacity in 2017 subject to project completion,” said Abdulwahab Al Sadoun, the association’s secretary general. “However, the actual growth rate in 2017 and 2016 may be lower compared to 2015 since a big portion of new capacity additions will come from speciality chemicals, which tend to be lower in volume but higher in value compared to commodity petrochemicals.”
Projects such as Sadara, Saudi Aramco’s US$20 billion joint venture with Dow Chemical of the US, is expected to ramp up output and will bring new products to the region.
But producers’ profits are narrowing because the prices of petrochemicals are linked to crude prices, which are still at half mid-2014 levels.
“Most observers do not think that oil prices will rise substantially in 2017 and so operating margins for many companies may be at levels seen during 2016,” said Arvind Aggarwal, a principal for the Middle East at consultancy Nexant.
“Low margins may attract new partnerships with existing producers, through to a sequence of selected mergers/consolidation.”
For example, Sabic (Saudi Arabia Basic Industries Corporation), posted a 6.8 per cent fall in third-quarter net profit, even as it cut costs.
Gulf countries also began last year removing subsidies and raising prices on energy, which will slowly erode competitiveness of regional producers who retained an edge over global rivals with cheap gas feedstock.
“Historically, oil prices have been the main driving factor for GCC petrochemical names but we believe that subsidy reform will take on a more driving role in the coming years as more efficient producers will outperform, while the less efficient ones will have trouble maintaining attractive returns,” said Yousef Husseini, a petrochemical analyst at Egyptian investment bank EFG Hermes.
dalsaadi@thenational.ae
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Four motivational quotes from Alicia's Dubai talk
“The only thing we need is to know that we have faith. Faith and hope in our own dreams. The belief that, when we keep going we’re going to find our way. That’s all we got.”
“Sometimes we try so hard to keep things inside. We try so hard to pretend it’s not really bothering us. In some ways, that hurts us more. You don’t realise how dishonest you are with yourself sometimes, but I realised that if I spoke it, I could let it go.”
“One good thing is to know you’re not the only one going through it. You’re not the only one trying to find your way, trying to find yourself, trying to find amazing energy, trying to find a light. Show all of yourself. Show every nuance. All of your magic. All of your colours. Be true to that. You can be unafraid.”
“It’s time to stop holding back. It’s time to do it on your terms. It’s time to shine in the most unbelievable way. It’s time to let go of negativity and find your tribe, find those people that lift you up, because everybody else is just in your way.”
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Signs%20of%20%20%20%20%20%20%20heat%20stroke
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Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
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Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Ferrari
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