Persian Gulf chemicals industry urged to form 'win-win' partnerships, consolidate

Chemical players in the Middle East and the Persian Gulf region have been urged to accelerate transformation and form "win-win" partnerships to future proof their operations and leverage capital and risk sharing.

Speaking during the 13^th annual Gulf Petrochemical and Chemical Association (GPCA) event Nov. 27, Yousef A. Al-Benyan, vice chairman and CEO of materials company Saudi Basic Industries Corp. (Sabic) and chairman of the GPCA, called on the local industry to bolster the joint efforts in “creating partnerships through consolidation [and] portfolio exchange, which will create scale and value for all the players.”

Without such structural measures, the Saudi executive warned, “we will not be able to compete with larger global players — both existing and new entrants.”

The comments came amid a bid by Saudi oil giant Saudi Aramco to acquire a large stake in Sabic.

In his remarks, Al-Benyan stated that the industry was “bound for transformation” considering the changes in the global economy and structural changes faced by end-use markets and suppliers.

“Changes across value chain nodes are forcing global and [Persian Gulf] chemical industry players to evolve by focusing on portfolio, competitiveness, and growth measures. Industry players are taking action that are creating significant value for shareholders in global capital markets,” he added.

Al-Beynan went on to say that players are also pushing for growth in the Asian markets, such as China which aims to add around 21.4 million metric tons of ethylene capacity between 2018-2025.

Despite the efforts, Al-Beynan believes that there is still a “need for more improvement” and that “companies must find new answers to fundamental business questions.”

The GPCA represents the downstream hydrocarbon industry in the Persian Gulf. Established in 2006, the association voices the common interests of more than 250 member companies from the chemical and allied industries.

Sabic, headquartered in Riyadh, Saudi Arabia, is a leading chemicals, commodity and high-performance plastics manufacturer.

The Saudi Arabian government owns 70 percent of Sabic shares with the remaining 30 percent is publicly traded on the Saudi stock exchange.