The petrochemical industry in the GCC grew 3.7 percent in 2016 reaching 150 million tons of capacity, mainly driven by Saudi Arabia, the Gulf Petrochemicals and Chemicals Association said on Monday.
Growth in the region outpaced the global average of 2.2 percent, the report said.
“The industry’s growth is largely due to new capacity added in Saudi Arabia, the region’s largest petrochemical producer with 99.1 million tons of capacity, representing a 66 percent share of regional capacity.”
Feedstock supply constraints and the global economic downturn weighed on the industry last year, compared to 2015, when the growth rate was 5 percent.
However, new projects in the region indicate a positive outlook, such as the $20 billion Sadara Chemical joint venture between Saudi Aramco and Dow, and the KEMYA Elastomer Plant, an affiliate of SABIC and ExxonMobil Chemicals.
The drop from 2015 figures can also be attributed to new capacity additions from specialty chemicals, which tend to be lower in volume but higher in value compared to commodity petrochemicals, GPCA said.
Meanwhile, chemicals capacity utilization in the GCC has been over 90 percent over the past five years, twelve percentage points above the global industry’s utilization average of 78 percent in 2016.
“The region continues to make significant investments in greenfield plant operations as well as brownfield efficiency gains as GCC producers explore new and often unconventional sources of feedstock to drive chemical output,” said Abdulwahab Al-Sadoun, GPCA secretary general.
In 2016, projects worth $13 billion were announced in the GCC, scheduled to come online between 2020 and 2024, adding eight million tons production capacity.
According to the report, the petrochemical industry’s performance continues to depend on factors linked to feedstock and energy prices, along with labor productivity, capital intensity, and global uncertainty, among others.
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