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ANALYSIS: GCC chemical logistics

by ASC Staff on Apr 27, 2017

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The state-owned Abu Dhabi National Oil Company (ADNOC) announced plans in November to more than double petrochemical production over the next decade as part of its 2030 strategy.

The plans encompass three initiatives aim to strengthen ADNOC’s presence in the energy sector and enhance its competitiveness. With high demand expected in the coming years, the petrochemical industry presents a strong investment case, and its expansion is being pursued as a critical element of Abu Dhabi’s ongoing economic diversification strategy.

During the past ten years, the GCC’s petrochemical production has increased three times over. “At 9.5 per cent 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,” says Abdulwahab Al-Sadoun, secretary general, Gulf Petrochemicals and Chemicals Association (GPCA).

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On the back of weaker demand conditions for crude oil globally since mid-2014, commodity rich economies across the GCC have increasingly sought to expand downstreamindustries and the range of derivative products in order to become more resilient during cyclical slowdowns. Regional chemical output in plastics, fertilizers and other products are chiefly destined for overseas markets. In 2015, 80 per cent, or 70.6 million tons, of petrochemicals were exported abroad.

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