The downstream petroleum industry is witnessing a diversification phase, transforming the Middle East from an exporter of crude to an exporter of finished products, said a senior government official.
Bahrain, where oil was first discovered in the region, still presented great opportunity for those in the petrochemical business to take part in developments and investments in the region, said Finance Minister and Minister in Charge of Oil and Gas Affairs Shaikh Ahmed bin Mohammed Al Khalifa.
He was speaking after opening the seventh annual Petchem Arabia 2012 conference at the Gulf Hotel in Bahrain.
“We have reached critical mass and the next step for the region is to move down the petrochemical chain,” he said. “Each new investment opens the door to many others to produce more complex and sophisticated products. It also opens the door for smaller investors and joint ventures, who can take advantage of niche markets, overseas or local.”
“The region is starting this phase, turning from a large volume wholesaler to a more sophisticated, high-margin producer,” he added.
The population growth in the Middle East has created a significant market.
The Finance Minister said that joint ventures in the petrochemicals industry were the way forward.
“Partners can provide technology, technical expertise, finance and management and open their marketing channels and expertise to joint ventures.”
The number of potential petrochemical products could grow exponentially to hundreds, he said.
“The best location to produce them depends on many factors, the most important being the markets. This is one area a partner can be most helpful in and we can develop these markets and products jointly in an efficient manner.
“Bapco has recently completed a $1.2 billion strategic investment programme, including a joint venture with Neste Oil of Finland, producing high quality lube base oils, and is currently involved in a multi-billion dollar modernisation programme,” he added.
Optimism for greater investment in the petrochemicals industry in Middle East resulted from ample supply of oil, gas and feedstock available for companies.
China’s economic growth and continued growth in India were other drivers of the petrochemicals industry in the Middle East.
“Asia has become the production centre and the Middle East is supplying the petrochemical raw materials,” said Shaikh Ahmed.
“Many investments in refining, petrochemicals and other related hydrocarbon industries are now taking place in the Middle East. As a result of these investments, the Middle East is turning into a major centre for petrochemicals and refining.”