Arab region set to take over petrochemicals?

Phenomenal investments by the UAE, Saudi Arabia and other major Arab hydrocarbon producers into the petrochemical industry will allow them to control nearly a quarter of the world's total petrochemical output, according to a recent official report.

At the wrap-up of 2007, the Arab nations produced roughly 8.5 percent of the global petrochemical output - that level is projected to leap in the next two years as a result of colossal new projects being constructed in the region, mainly in Saudi Arabia, which could become the world's top producer of such substances, said the report by the 10-nation Organisation of Arab Petroleum Exporting Countries (OAPEC).

Based in Kuwait, OAPEC said in the report that most regional nations have embarked on mammoth petrochemical projects as part of economic diversification programmes, potentially pushing Western petrochemical producers to suspend planned expansions given the Arab region's huge gas reserves. "As a result of this sharp increase in the region's petrochemical output capacity," said the report, "producers and investors in North America and West Europe are expected to face obstacles in their plans to expand their production capacity, prompting them to suspend expansion projects, leading to removal of bottlenecks."

"The petrochemical industry in the Arab region has been passing through an unprecedented boom reminiscent of the boom in the late 1970s," the report continued. "This is due to several factors including the availability of massive gas resources, a large consuming market, a strategic location between eastern and western markets and the intensifying efforts undertaken by regional governments to develop non-oil industries and diversify their economies."

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