African Petrochemical Sector to have a bright future

07-Nov-08

As the petrochemical industry intensifies its global search for new chemical feedstock sources, a growing number of companies are looking closely at Africa's largely underdeveloped and potentially vast hydrocarbon and mineral resources as an alternative source of supply. In a soon-to-be-initiated study- Nexant will analyze fundamental issues that face these industries as they gear up to address strong demand growth in the African continent. For example, ethylene demand is expected to roughly triple by 2025 as a result of a demand growth rate that is about twice the global average. In fertilizers, the typical African farmer uses about one-tenth of the amount of fertilizer per acre that a typical U.S. farmer uses, offering considerable room for increased fertilizer demand. However, the question remains: how will this increased demand be met? Until now, Africa's relative isolation, underdeveloped local end-use markets, poverty, and political strife have dampened development of the continent's chemical and fertilizer industries. However, as investment in the region grows, the outlook for future development of a robust African chemical industry is improving. Production costs in the Middle East and other regions are escalating appreciably, making Africa a potentially attractive opportunity.