INDUSTRY INSIGHTThought Leadership

GCC’s chemical horizon: Unpacking 2022 and navigating 2023

By Noora Mukhtar, Research Specialist, GPCA

Overview of the GCC chemical industry performance in 2022

In the dynamic landscape of the GCC chemical industry, 2022 witnessed noteworthy trends and developments shaping the sector’s trajectory, influencing production, revenue, trade patterns, and sustainability efforts.

Production: The positive momentum of the overall chemical production growth in the GCC continued in 2022 (1.1%) and expected to grow further by about 2% in 2023 with Saudi Arabia representing the largest share.

Sales revenue: The GCC chemical industry recorded its highest revenue level of USD107.8 billion in 2022, primarily driven by the post-pandemic economic rebound, which spurred strong demand and global price inflation.

The largest share contributing to the overall sales revenue remains to be commodity polymers. However, we cannot overlook the record-high prices for agri-nutrients  which witnessed a sales revenue growth of 42.5% in 2022 driven by a complex combination of various factors such as rising energy costs, supply and demand dynamics, and geopolitical factors. This draws the need for a balanced diversified product portfolio to avoid lowering the revenue levers at one front of the sales.

Economic impact: The industry plays a fundamental role as a driving force in the region’s economic landscape. The chemical industry’s sales revenue contributed by almost 5% to the region’s Gross Domestic Product (GDP) and 39% to the manufacturing GDP in 2022.

Trade pattern: Fuelled by rising global demand and enhanced competitiveness through technological advancements and strategic initiatives by GCC nations, the export bounced back strongly after the considerable decline in 2020. Asia holds a significant share of 50% where China and India are the leading export partners in this extensive global trade network.

The GCC chemical industry is capitalizing on abundant trade opportunities, as evidenced by the highest trade balance recorded in 2022 accounting for 59.2 million tons valued at USD 66.1 billion. This achievement highlights the industry’s success in fostering favourable trade conditions, contributing to its economic prosperity and competitiveness in the global market.

Global position: GCC production capacity market share of the global petrochemical industry is 6.5% which declined by 1.7% over the past five years driven by the rise of new players like China, prioritizing increased domestic production. The global share of the GCC production capacity for chemicals exceeds its corresponding share in chemical sales (1.9%), reflecting the GCC’s focus on low value, high volume commodity chemicals.

Saudi Arabia ranks among the top ten countries representing 1.6% of the global chemical sales revenue, enhancing the region’s presence and contribution to the international chemical industry landscape.

Investments: There was a drop in capital investment in 2022 due to prioritizing improving operational efficiency, project completions, and a strong focus towards sustainability and environmental initiatives.

The GCC chemical industry continues to invest in greenfield and brownfield investments, with a predominant focus on greenfield where the total GCC investments between 2022-2027 are projected to increase at a CAGR of 19.4%.

Figure 1: Key industry performance indicators in 2022

Source: GPCA facts and figures report, 2023

Figure 2: The sustainability pulse of the GCC chemical industry

Source: GPCA responsible care performance metrics report, 2023 and GPCA research

Environmental performance: Despite the rise in production capacity, GHG emissions in the GCC chemical industry dropped in the past year. This reduction can be attributed to the industry’s adoption of CO2 emission control methods, evident in the 10.7% decrease in GHG intensity between 2021 and 2022.

The GCC chemical industry is proactively addressing resource utilization and waste management, achieving substantial reductions in wastewater discharge, hazardous waste, and energy consumption, as illustrated in Figure 2. These notable accomplishments, realized through targeted projects and the adoption of cleaner technologies, reflect the industry’s steadfast dedication to sustainability and environmental objectives.

Sustainability and innovation efforts:

The chemical sector faces significant Environmental, Social, and Governance (ESG) risks and opportunities. Radical innovation in product portfolios, phasing out products of concern, community engagement, transitioning to circular economy practices, and building sustainable, resilient, transparent, and traceable value chains are imperative. Collaborations towards a circular economy were prominent in 2022. Industry players engaged in collaborative efforts aimed at sustainable practices and minimizing environmental impact, reflecting substantial investments and ambitious goals for innovation and future-ready solutions. GPCA member companies are exploring innovative initiatives for their industrial processes such as:

Carbon capture: GCC chemical companies are investing in various carbon capture, utilization and storage (CCUS) projects to pioneer sustainability and low-carbon production, as well as adhere to national carbon neutrality targets.


Hydrogen: The rising demand for both blue and green hydrogen and R&D developments are incentivizing GCC producers to allocate resources towards the acceleration of regional hydrogen projects.


Electrification of crackers: The regional industryis taking a giant leap towards climate-neutrality through electric cracking with the potential to cut CO2 emissions by more than 95%.


Chemical recycling: Recognizing the environmental impact of plastic waste and the importance of a circular economy, GCC companies are investing in innovative technologies to facilitate the recycling of plastics with cautious optimism for chemical recycling. Mechanical recycling is mostly established in the GCC, and chemical recycling is relatively new and not widely used in the GCC. It is important to note that both these recycling methods complement each other in the broader effort to manage plastic waste efficiently and create a more sustainable circular economy.

Figure 3: Innovative projects in the GCC chemical industry toward a sustainable future

Source: GPCA research, 2023

Global partnerships and overseas expansions:

The GCC petrochemical industry has strategically pursued global partnerships and overseas expansions, marking a significant shift towards diversification and increased market presence. Collaborative ventures with international partners have become instrumental in accessing new technologies, fostering innovation, and expanding product portfolios. These partnerships often facilitate the exchange of expertise and best practices, enhancing the overall competitiveness of GCC companies on the global stage. Simultaneously, overseas expansions have been a key strategy to secure raw materials, enter new markets, and establish a resilient supply chain. GCC petrochemical firms are increasingly investing in facilities and operations beyond their home region, leveraging their capabilities to meet the growing demand for petrochemical products worldwide and contributing to the industry’s long-term growth. Some of the latest key expansions and international partnerships are:

  • In 2023, SABIC and SINOPEC Tianjin Petrochemical Co. Ltd. (SSTPC) successfully started commercial operations of Asia’s first-ever polycarbonate plant in China.
  • Kuwait’s Petrochemical Industries Company (PIC) has acquired a 49% stake in the SKC specialty petrochemical plants in Korea, and actively promoting eco-friendly plastic waste recycling initiatives in Kuwait.
  • In 2022, SABIC and ExxonMobil commenced operations at their Gulf Coast manufacturing facility in Texas, USA. The facility primarily focuses on the production of polyethylene and monoethylene glycol.
  • QatarEnergy and Chevron Phillips Chemicals have ongoing joint ventures in Qatar. They recently announced the construction of an integrated polymers facility in Orange, Texas, similar to the under-construction complex in Ras Laffan Industrial City in Qatar.
  • HAPCO, a joint venture between Aramco and Chinese partners, has begun the construction of a major refinery and petrochemical complex in China which is anticipated to be fully operational by 2026.
  • Aramco has successfully completed a $3.4 billion acquisition of a stake in Rongsheng Petrochemical (10%), further enhancing its downstream presence in China.

Navigating 2023 and global markets dynamics:

As we transition into 2023, the GCC chemical industry is poised for continued growth, building on the successes of 2022. However, global trends and influences have a profound impact on shaping the industry’s trajectory.

An anticipated initiative is Saudi Arabia’s plan to launch a greenhouse gas credits scheme in early 2024. This scheme aims to allow companies to offset their emissions by purchasing credits from projects that voluntarily reduce or remove greenhouse gas emissions. The goal is to incentivize large-scale deployment of emission reduction and removal activities, aligning with national climate-related strategies.

One of the key dynamics to navigate is the evolving landscape of carbon border adjustment mechanisms (CBAM) in Europe which entered into application in its transitional phase in 2023 including fertilizers. CBAM introduces both challenges and opportunities for GCC exporters.

Aligning with evolving international environmental standards and competitive adaptability will be crucial to maintaining and expanding market access. The GCC’s strategic investments in carbon capture, hydrogen projects, and sustainable practices showcase a commitment to a low-carbon future. As the global efforts to combat climate change intensifies, the GCC chemical industry’s resilience and adaptability is up for the test.

Additionally, the oversupply and weakening demand have repercussions for the GCC chemical industry, given its interconnectedness with global markets. As China continues to increase its chemical production capacity, the GCC may experience heightened competition and some potential shifts in market dynamics.

On the other hand, record-high energy prices in Europe have decreased the competitiveness of European chemical producers, leading to increased exports from the US and the Middle East. European customers, committed to sustainability, may face challenges in sourcing products locally due to cost considerations, potentially opening opportunities for alternative suppliers.

Figure 4: Global trends influencing the GCC chemical industry

Source: GPCA research, 2023

Adapting to these changing market dynamics, including shifting consumer preferences, regulatory changes, and geopolitical developments, will be essential for sustained success. Proactive measures to anticipate and respond to these dynamics will position the GCC chemical industry as a flexible and resilient player in the global market.

The industry must reevaluate supply chains, striking a balance between costs, carbon footprint, and resilience. The adoption of digital technologies and automation is expected to gain momentum in 2023, enhancing operational efficiency and competitiveness.

Another global challenge to pay attention to the increasing demand for recycled materials faced with limited supply, emphasizing the need for circularity in waste-to-feedstocks. Sourcing high-quality food-grade recycled material, particularly for packaging, poses a challenge in 2023. Brands are allocating capital to circularity goals, but meaningful progress may be challenging.

The rise in Electric Vehicles (EVs) drive higher plastic consumption, with a 3-5% increase in units compared to traditional internal combustion engine (ICE) vehicles. Global EV sales, supported by government incentives, contribute to polymer demand, with polypropylene positioned to benefit significantly. The shift to EVs and lighter vehicles fuels polymer demand, offering growth potential in the transport-sector plastics market.

Concluding remarks

In conclusion, the global pressure on chemical value chains varies, with Europe facing supply-driven inflation, North America dealing with demand-driven downturns, and Asia, especially China, becoming a dominant production region. Chemical players must scrutinize large-scale investment plans considering geopolitical tensions and supply chain risks.

Energy-intensive industries will concentrate investments in regions with reliable and competitive energy supply, impacting regions like Europe, North America, and the GCC. Success in 2023 and beyond necessitates building resilience, accelerating investments in new and greener technologies, portfolio optimization and developing M&A and margin management as core capabilities that reflect the industry’s proactive response to the evolving global landscape.