GPCA issues supply chain warning

Petrochemical producers in the GCC must focus on supply chain efficiencies or lose export market share, the Gulf Petrochemicals and Chemicals Association (GPCA) has warned.

The GCC tripled its production capacity in the period between 2004 and 2015 and regional chemical output in plastics, fertilisers and other products is chiefly destined for overseas markets. Last year, 80 percent – 70.6 million tons – of petrochemicals were exported abroad.

“In just over a decade, the GCC’s petrochemical industry has expanded its capacity from 38 million tons in 2004, to 142.1 million tons in 2015,” said Dr Abdulwahab Al-Sadoun, Secretary General, GPCA.

“At 9.5 percent per year, this production growth is second only to China, with more and more diversified products being produced in the GCC. As capacity expansions continue, and an estimated 40 additional products are introduced from GCC petrochemical producers till 2020, the supply chain will have to adjust. We can already see the direct impact of product expansion on the supply chain, resulting in the emergence of business- to- business style logistics industry that includes road, shipping and port facilities, with further expansion plans in railways in the near future.”

New and improved port infrastructure in the region includes Qatar’s New Port Project (NPP), Yanbu Port in Saudi Arabia and Jebel Ali Port and Khalifa Port in the UAE. Port expansions are expected to continue, as the new US$7bn mega-port near Qatar’s Mesaieed Industrial Zone is set to open this year, and port construction continues in Kuwait.

However, there are some serious challenges the region has to overcome, including current economic conditions, port congestion, complicated customs procedures, under invested infrastructure and stalled free trade agreement negotiations with the major economic blocks like the European Union.

“Improving logistics facilities is well within the remit of the region’s petrochemical companies,” Dr Al-Sadoun stated, adding that petrochemical producers should also up their investment in training and education of their workshop and partner with regional universities and colleges to bridge the current gap between academia and industry.

The message came ahead of the GCC’s 8th Supply Chain Conference, taking place 2-4 May in Dubai. Held on the theme ‘Supporting Downstream Development—Creating Supply Chain Linkages’, the conference gathers speakers from petrochemical companies, railways and consultancies to explore synergies between the GCC’s chemical industry and the emerging logistics infrastructure in the region.