During its Annual General Assembly on 13 of March, GPCA held a CEO roundtable session focusing on the challenges and opportunities for regional industry consolidation.
The exclusive, members only session was chaired by Yousef Al-Benyan, Vice Chairman and CEO, SABIC, and Chairman, GPCA, who set the tone for discussion by highlighting GCC’s growing role as global petrochemical player, and reminded everyone in the room that to take this growth forward a new strategic approach would be required.
Al Benyan set the agenda by outlining key priorities for petrochemical producers in the region, namely, to capitalize on future growth opportunities while addressing key challenges; adjust existing business models accordingly to strengthen the industry’s competitive position; address crucial capabilities, manage cost and, finally, invest in human capital, technology and innovation.
Al Benyan emphasized on the role of supply chain in boosting bottom line performance, and said restrictions in feedstock availability mean that growth would need to come from consolidation and synergies. He further highlighted GPCA’s role as a catalyst to accelerate the industry’s transformation, and provide business leaders with the right tools, opportunities and platform to make informed decisions and create value for their shareholders.
A special presentation on ‘Regional consolidation in the petrochemicals industry’ was delivered by Jerome Fileni, Head of Chemicals, EMEA, HSBC; Dave Witte, SVP, Oil, Midstream, Downstream & Chemicals, IHS Markit; and Sanjay Sharma, VP, MDE & India, IHS Markit.
It was highlighted during the session that between 2021 and 2030, ethylene demand growth will require 45 new crackers globally, and to maintain current global share, GCC will need to build around nine new crackers. Each new world scale cracker has the potential to contribute approximately USD 4 billion to GDP and create 3,000 jobs excluding induced effects.
As well as listing the factors affecting this region’s competitiveness such as low oil prices and subsequent reduction of cost position; change in competitive landscape with the emergence of US shale and China; and the shift toward liquids based mixed feed crackers, speakers outlined the key drivers for regional consolidation ranging from maintaining and increasing global market share to improving competitiveness and driving down cost.
Finally, petrochemical players in the region were encouraged to look at integration, portfolio management, diversification, production excellence and opportunities beyond the Middle East, to improve their competitive advantage.