"United Arab Emirates Petrochemicals Report Q3 2016" Published

From: Fast Market Research, Inc.
Published: Tue Jun 14 2016

The UAE is set to face a challenging year as it doubles output at the massive Borouge petrochemicals complex. The combination of an end to sanctions on Iran, a Chinese slowdown and Saudi Arabia's opening of its massive Sadara complex will work to keep petrochemicals prices low. Meanwhile, the UAE's dominant ethane feedstock will struggle to compete with falling oil-derived naphtha feedstock used by rivals in Asia and Europe.

The Gulf Cooperation Council (GCC) is seeing a slowdown in petrochemicals output growth, which fell to 7.5% in 2015 from 11% CAGR in 2004-2014, and is set to fall to 3.2% on average over the next five years. Constraints in gas supply have been blamed and this tightness in the gas market is leading to upward pressure on ethane costs.

Ethane availability and feedstock pricing will remain key to the growth of the UAE's petrochemical industry. Rising feedstock prices, limited ethane feedstock availability, increasing construction costs and the anticipation of slower demand growth in key markets are expected to lead to a decline in the number of new project announcements. A significant risk factor for the UAE's petrochemicals industry is its current reliance on naphtha feedstock.

Full Report Details at
- http://www.fastmr.com/prod/1182693_united_arab_emirates.aspx?afid=301

In Q116, Saif Al Khaili Group awarded a construction contract to Nuberg Engineering for the USD76mn Emirates Chemical Factory, which will produce caustic soda and chlorine at the Khalifa Industrial Zone Abu Dhabi (Kizad). The chemical facility is due to open in 2017 with capacities of 22,900 tonnes per annum (tpa) of chlorine and 25,000tpa of caustic soda.

Chemaweyaat's complex will start up in 2018 and will include an olefins plant, an aromatics complex and a range of downstream polymer and chemical units. The first part of the development, Tacaamol, will use heavy naphtha feed for aromatics units and a lighter naphtha feed for a 1.5mn tpa mixed feed cracker. Tacaamol is expected to be the world's largest fully integrated grass roots chemical complex with capacities, aside from the ethylene unit, including 690,000tpa propylene, 950,000tpa polyethylene and 440,000tpa polypropylene.

In BMI's Middle Eastern Petrochemicals Risk/Reward Index matrix, the UAE has a score of 67.3 points, unchanged since the previous quarter following recent upward revisions. The score is supported by the increased use of lower-cost naphtha, which should help support margins. The country retains its second place in the Middle East and Africa RRI table, 8.8 points behind Saudi Arabia and 3.7 points ahead of Iran. However, it is facing a resurgent Iran with a huge amount of capacity coming onto the market with more competitive prices, which threatens to leapfrog it in the rankings.

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You may also be interested in these related reports:

- United Arab Emirates Oil & Gas Report Q2 2016
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- United Arab Emirates Midstream Oil and Gas Industry Outlook to 2020: Market Forecasts for Liquefied Natural Gas (LNG), Oil Storage, Pipelines and Gas Processing
- United Kingdom Petrochemicals Report Q3 2016
- Oil and Gas Pipelines Industry Outlook in Middle East to 2020 - Capacity and Capital Expenditure Forecasts with Details of All Operating and Planned Pipelines

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