As other finance options become increasingly difficult to tap, the Gulf petrochemical industry could increase reliance on the sukuk, to finance its high-capacity new projects. As other options of long-term credit financing have faded, the sukuk seems to be the most viable among the financing alternatives for petrochemical projects in the region.
An announcement at the Gulf Petrochemicals and Chemicals Association (GPCA) meet, emphasizes that the region will expand its petrochemical production capacity by 10 mln tons in 2010, doubling its existing 63 mln ton capacity to 115 mln tons by 2015.
Petrochemical industries, particularly the ones with federal support, in the Gulf have in the past resorted to issuing the Shariah-compliant Islamic bonds to finance costly projects.
The sukuk market in is currently valued at over US$100 bln and it is projected to reach US$150 bln by 2010. In 2006, 80 sukuk issues raised US$18.15 bln globally, with a large share of this issuance occurring in the Gulf.