Competition from the desert

Will 2010 bring the long awaited upswing for the processing industries? The experts are divided; the question mark remains.

The Chemical Process Industry (CPI) also has mixed feelings about the future. Even if production is picking up again and in the second half of the year many producers were able to restart the plants they had had to shut down in the first half, the uncertainty is still palpable — and worldwide, too. The global credit pool, which by the middle of the year had run dry, is refilling only very slowly, and the prices of most chemical products — and hence profit margins, too — are only now inching their way back up to ground level after having fallen through the floor.

No one has been left unscathed. The only exception reads like a fairytale out of 1001 Nights, but is in fact reality: The United Arab Emirates have decided to place their faith in the massive expansion of their petrochemical industry. The driving force here is the emirate Abu Dhabi, which according to official estimates is sitting on some 90 billion barrels of oil, or enough for a century to come at current rates of consumption. Instead of simply exporting this costly resource, however, the sheikhs intend to process more of it in situ. By mid-year, 22 downstream projects of various orders of magnitude and worth a total of 31.9 billion US dollars were either under construction, in planning or had been put out to tender. The most ambitious of these is the Abu Dhabi Chemicals Industrial City with its integrated petrochemical complex Chemaweyaat near Taweelah. Work on this project is to commence in 2011 and it is estimated that the first construction phase alone will gobble up 20 billion dollars! Completion is scheduled for 2014. The new complex is to have an annual output of more than eight million tonnes. In view of the sums being invested, therefore, the question mark hanging over 2010 could turn into an exclamation marks — at least for plant builders.

For chemical producers worldwide, however, the emergence of a major oil producer in their own value chain is likely to prove immensely challenging. Swift action to upgrade and increase the efficiency of existing production plants has therefore become more pressing than ever. And if the year 2009 was a year of restructuring, then how much more can the same be said of the year 2010.