Economic background

In 2005 the Middle East became the world’s larger producer of petrochemicals and has earmarked over $50 billion of new investments in the industry by 2010, with $12 billion in Qatar only. The abundance of the fuel and feedstock and the heavy investments in the basic petrochemicals sector position the Middle East as the ‘natural home’ for the petrochemical industry. Today for example Saudi LDP (Low Density Polyurethane) is delivered to Chinese factories at prices lower than Chinese LDP:

        Production of polyethylene based products in the Middle East is projected to grow
        20% to 2010

        Middle East share in the global ethylene market is expected from 9% in 2004 to
        grow to 17% in 2010

        40% of all new ethylene capacity will be built in the Middle East.

The Financial Times reveals that the present crisis may be the making of the Gulf’s chemicals industry. Chiefly this is because of easy and cut-price access to oil and gas. Seeking to capitalize on this advantage, governments have thrown cash at their petrochemical industries in recent years, expanding total output to €46bn ($59.6bn) and an annual growth rate of more than 9% since 1997, the consultancy says.

The Gulf focuses mostly on basic petrochemicals such as ethylene, poly-olefins, polypropylene, but will soon be able to produce a wider array of chemical products. It is already a leading manufacturer of fertilizers.