North Africa’s chemical industry that is in its nascent stage, seems poised for promising growth. Several factors are conducive for this growth - abundant supply of natural gas feedstock, expanding markets and the improving political stability that could attract foreign investment as per ICIS. The most important factor for future growth is recognition of the potential of downstream industry by local energy majors. Africa is well positioned logistically, with access to markets in Southern Europe, Asia and the Middle East, and relatively low labor costs.
With ethylene demand pegged at 1.9 mln tpa (2% of global demand) in Africa, the region represents one of the smallest petrochemical markets globally, with low demand. Planned and speculative capacity increases could see North Africa's petrochemical output surge by around 40-50% by 2020 from current levels. But this seems like an uphill task as there is little incentive and plenty of risk for chemical producers to invest in North Africa, particularly with the imminent influx of supply as huge capacities come onstream in the Middle East. The other disadvantages include poor infrastructure, corruption, security issues, and a lack of skilled workers.
Egypt and Algeria are expected to drive petrochemical capacity growth in the next 5-7 years. Production capability is forecast to more than double between 2008 and 2015. By 2020, they will account for 58% of regional production. Egypt, in particular, will see significant investment over the coming years, which will transform its product portfolio to include new capacities for ethylbenzene, purified terephthalic acid (PTA), styrene, ethylene oxide (EO) and monoethylene glycol (MEG). Algeria's output, meanwhile, is set to increase fourfold by 2015 - with an emphasis on ethylene, methanol and MEG.