GPCA: Petrochemical industry provided 150K direct jobs in the ‎Gulf during 2021‎

MEED magazine revealed that regional energy companies are taking advantage of natural gas to be the driving force in the development of petrochemical derivatives complexes, while global demand for natural gas has increased significantly over the past few years, mainly due to its role as a bridge to the transition to zero carbon emissions. As a result, energy producers in the Middle East and North Africa (MENA) region have made plans to increase their gas supply to the global economy and become net exporters over time.

According to Al-Anbaa, the Gulf Petrochemical and Chemical Association (GPCA) estimates that in 2021, the petrochemical industry supported more than 150,000 direct jobs in the Arabian Gulf, and the Institute estimated the industry’s annual contribution to the regional GDP at 4.9%, taking into account all direct and indirect contributions.

Moreover, the chemical industry in the GCC has a strong multiplier effect on regional GDP – for every $1 the industry generates, an additional $0.76 is generated elsewhere in the regional economy.

Meanwhile, the Russian-Ukrainian war underscored Europe’s dependence on few sources of stable gas supplies. With Moscow slashing gas supplies to Europe, major MENA gas producers – such as Qatar, Saudi Arabia, the United Arab Emirates, Egypt and Algeria – are scrambling to increase production in order to help Europe meet its immediate gas needs to avoid a cold winter.

In addition to these factors that pressure hydrocarbon producers in the MENA region to invest in increasing gas production capacity, regional governments have also developed plans to exploit the full potential of natural gas as an enabler to expand national energy supply chains and build non-oil industrial sectors.

State energy companies use gas as a primary source of ethane stocks for the development of large-scale petrochemical plants and associated derivative units. Naphtha, one of the oil derivatives, has remained the main raw material for petrochemical production in the MENA region, due to the abundance of crude oil reserves.

However, the use of gas as a feedstock for petrochemical production is not new in the region. Ethane-based petrochemicals and their derivative components have been manufactured for decades, albeit on a small scale, primarily in Qatar and Iran, which have huge gas resources.

The regional energy scene has undergone a major transformation over the years, underlined by the growing importance of natural gas. At present, the number of planned gas-based petrochemical and derivatives projects exceeds the number of conventional naphtha-based facilities, with state energy companies and private players alike investing in enhancing the value of ethylene production chains.

The Secretary-General of the Gulf Petrochemicals and Chemicals Association (GPCA), Abdulwahab Al-Saadoun, says that the petrochemical industry is a major employer in the region, as it contributes significantly to the value-added economy in the region and has a significant multiplier effect on jobs.

“Value pools can help in sourcing the intermediate products produced by the petrochemical complex and producing the final products used by the end consumer in any country,” says Ilan Habib, the regional director for the Middle East at the independent commodity intelligence services firm.