Petrochemical boom in the Gulf decelerates

22-Oct-08

Engineering, procurement and construction (EPC) contracts awarded in the Gulf petrochemicals sector for 2005 totalled to US$17.5 bln and US$16.3 bln in 2006. The value of EPC contracts for 2007 more than halved below US$7 bln signaling the beginning of the end of the boom in the Gulf petrochemical sector. Slump in global demand along with a credit crunch leading to project delays caused by rising costs could be the possible reasons for the downfall. Several projects in the Gulf region in the pipeline, promise to propel the petrochem industry once again. Almost US$84 billion worth of new contracts are estimated to be awarded in the Gulf until 2013. The region will have an excess petrochem capacity of up to 8 mln tons between 2009 and 2011. The region plans to export to meet almost 60% demand in fast-growing Asian economies, as producers in USA and Europe plan capacity reduction. 50% of China's petrochem demand will be satiated by this region.