Middle East needs to ramp up petrochemicals logistics network to match increasing production

19-Apr-16

Petrochemicals production capacity in the Middle East is currently growing at 9.5% pa. 40 new petrochemicals products will be introduced in the region by 2020. Hence there is a need in the region to strengthen its logistics network to ensure consistent exports, a senior executive at Gulf Petrochemicals and Chemicals Association Monday, as reported by Platts. "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," Abdulwahab Al Sadoun, secretary general of the GPCA, said in a statement. Enhancing the logistics network becomes particularly important given that most of the product from the region is exported. In 2015, the Middle East exported about 80% of total petrochemicals production, or 70.6 mln mt, the association said. "In just over a decade, the GCC's petrochemical industry has expanded its capacity from 38 mln mtpa in 2004, to 142.1 mln mtpa in 2015," Al Sadoun said. Countries in the region have tried to strengthen their logistics networks but have not been able to catch up with the rise in petrochemicals capacity. The GPCA identified such factors as complicated customs procedures and underinvestment in infrastructure as detrimental to petrochemicals logistics. Reports of congestion at the ports in the region appear almost regularly during the summer months and during the Islamic holy month of Ramadan. Existing ports in the region include Qatar's New Port Project or NPP, Yanbu in Saudi Arabia and Jebel Ali and Khalifa ports in the UAE. "Port expansions are expected to continue into 2016, as the new $7 billion mega port near Qatar's Mesaieed Industrial Zone is set to open this year and port construction continues in Kuwait," GPCA said.