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Arabian Gulf’s petrochemical return on investment can improve by 10% through – functional excellence, says new GPCA-McKinsey report

Dubai, United Arab Emirates; November, 2015: The GCC’s petrochemical producers could achieve an additional 10% in return on investment through optimizing every aspect of their operations, according to Thoughts for a New Age in Middle East Petrochemicals, a new report by the Gulf Petrochemicals and Chemicals Association (GPCA) and McKinsey.

“The petrochemicals industry in the Arabian Gulf region has seen impressive growth in the last decade, largely due to the availability of favorably priced gas, a key raw material in the production of chemical products,” said Dr. Abdulwahab Al-Sadoun, Secretary General, GPCA. “The health of the global economy and notably the slower demand in growth markets such as China, combined with rising competition from non-conventional producers, means that we are heading towards more competitive environment in global markets. Therefore, maximizing operations to improve shareholder returns on investment is crucial for maintaining our competitive advantage.”

Petrochemical production capacity rose from 53.4 million tons in 2004, to 136.2 million tons in 2014, a 10% cumulative annual growth rate in this decade, according to the latest industry figures from the GPCA. “The GCC’s petrochemical industry growth is second only to China in this decade, which grew by 13% in the same period,” continued Dr. Al-Sadoun. The petrochemical industry in the Arabian Gulf region exports to 170 countries across the globe with sales generated by the GCC chemical industry reaching US$ 87.4 billion.

To maintain the pace of growth going forward, Arabian Gulf petrochemical producers should focus on several development areas for example, improving functional excellence, managing volatility and making strategic decisions supported by micro-economics.

Richard Verity, a partner from McKinsey & Company, has co-written a report entitled Thoughts for a new age in Middle East Petrochemicals. He says “This report tackles head-on the ‘new age’ – an age where many of the old regional certainties have ceased to apply and where the fall in oil price adds a new layer of challenge. We sketch the consequences of these changes and propose ways in which Middle East producers could react”.

The Thoughts for a New Age in Middle East Petrochemicals will be released during the GPCA Annual Forum on 17-19 November 2015 in Dubai. Now in its 10th edition, the conference will feature speeches from leaders in the energy sector including a keynote from His Excellency Eng. Suhail Mohamed Faraj Al Mazrouei, Minister of Energy for the United Arab Emirates. Other speakers include His Excellency Abdullatif A. Al-Othman, Governor & Chairman of the Board of Directors, Saudi Arabian General Investment Authority (SAGIA); Yousef Al-Benyan, Vice Chairman, GPCA and Acting Vice-Chairman and Chief Executive Officer, SABIC; Nizar. M. Al-Adsani, Deputy Chairman & Chief Executive Officer, Kuwait Petroleum Corporation and Neil Chapman, President, ExxonMobil Chemical.

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