Petrochem project delays and cancellations estimated in the Gulf due to surging construction cost

14-Dec-07

Gulf Petrochemicals and Chemicals Association (GPCA) has warned that construction cost bubble in the Middle East region would lead to some project delays and cancellations, as the surge in petrochemicals exports from the Gulf is projected at more than 50 million tons by 2008. Expressing concern over the construction cost the region is currently experiencing, GPCA Chairman said it makes it difficult to achieve acceptable financial targets when capital costs have risen so much. He added that the petrochem industry in the region is approaching a period of overbuilding that is accompanied by weaker markets. This is anticipated to be accompanied by the slowing of the global economic growth that is driven by a slowdown in the GDP growth in the US. However, this will not be the first time that the industry passes through this phase. The industry has experienced these periods of over capacity and slow growth numerous times in the past and has worked through them successfully and emerged stronger.