THE GCC PETROCHEMICAL AND CHEMICAL INDUSTRY

FACTS & FIGURES

2021
www.gpca.org.ae
CONTENTS
Performance Of The GCC Chemical
Industry 4
Industry’s Socio-Economic Impact 12
Trade Development 22
GCC Industry’s Global Competitiveness 33
Capital Investment 40
R&D Investment 48
GCC Downstream Industry 54

Note: GPCA is committed to our aspiration of becoming a credible

source of information and statistics related to the chemical and
petrochemical industry in the Arabian Gulf. In line with this, for
this edition of the GPCA Facts & Figures (2020) report, we have
introduced a new methodology to capture, calculate and aggregate
industry data. This coupled with new data received from our
members, as well as from the public domain, has allowed us to
present more accurate information. Readers can feel confident that
GPCA has made every effort towards minimizing error and ensuring
that the quality and reliability of the information presented within this
report is as high as possible. For any queries and feedback, please
write to us at [email protected].
CHAPTER 1:

PERFORMANCE
OF THE GCC
CHEMICAL
INDUSTRY
Current Production Capacity and Growth Trajectory
GCC chemical industry grew by 1.2% in 2020,
below the historical average of 5.9%, due to
challenging business environment and slower
capacity additions
Figure 1: GCC Chemical Industry Capacity Growth Trend (Million Tons and % Growth Rate)

CAGR (2012-2020) Y-O-Y Growth

+5.9% GCC Capacity (million tons)

160 18.5% 20
148.1 150.0
150
140 136.8
129.7 130.8
130 15
119.5 13.2%
120
110
100.9
100 94.7 92.7 8.5% 10
90
80 8.9%
5.5%
70
5
60
50 1.2%
40
30 0
-2.2%
20
10 -4.4%
0 -5
2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: GPCA Questionnaire

Note: GPCA member companies only

With the start of 2020, the growth prospects across much of The response from the GCC chemical industry was immediate
the world were already weak due to rising geopolitical tensions, and many producers stepped up the production of key raw
trade challenges and slower growth in several key industries. In materials for the manufacture of products used to fight the
addition to the negative sentiment, the Covid-19 pandemic put pandemic. The overall chemicals output in the GCC grew by
unprecedented pressure on economies and industries. 1.2% in 2020, lower than the historic average, recording a 150
million tons capacity.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 5
 Production Capacity by Product Segment
Bulk and intermediate products continue
to dominate the GCC chemicals output,
accounting for 66% of the total output in
2020. However, growth was led by inorganic
chemicals and specialties.
Figure 2: GCC Chemicals Production Capacity by Product Segment, 2020

CAGR% (2012
- 2020)

Value added Chemicals

Inorganic chemicals 38.0%
Performance Polymers & Rubbers
Inorganic chemicals
2.3%
1.8% Performance Polymers & Rubbers 19.5%
Intermediates
1.0%
Basic
14.6%
Intermediates 7.2%
28.9%

GCC chemical industry 5.9%

17.0%
Value added Chemicals 4.6%
Commodity Polymers

22.9%
Basic 4.0%

Fertilizers
Fertilizers 3.2%

Commodity Polymers 2.9%

GCC Chemical Industry
5.9%

Source: GPCA Analysis, 2020

Note: GPCA member companies only, 2020 is preliminary

Our data shows that the GCC chemical industry has added In line with recent trends, growth in inorganic chemicals which
1.8 million tons in 2020, most of which are intermediates and are utilized as key raw materials, outpaced that of commodities
inorganic chemicals. The 2020 segmental breakdown is led by and specialities as well. Inorganic chemicals recorded an
the basic chemicals with 28.9% share, followed by fertilizers with impressive growth rate of 38%, outpacing the industry average
22.9%, commodity polymers with 17%, and intermediates with by more than six times.
14.6%.

6 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Production Capacity by Country
The majority of GCC chemicals continues to be
produced in Saudi Arabia, although other GCC
producers continue to build their capacities
Figure 3: GCC Chemicals Production Capacity by Country, 2020

CAGR% (2012-2020)

Kuwait Bahrain UAE 9.3%

Oman
0.9%
UAE 3.6%
2.1%
Saudi Arabia 7.5%
8.1%

Qatar Chemical industry overall 5.9%

10.5%
2020 Total
150 million tons Oman 1.5%

Qatar 0.8%
74.8%

Saudi Arabia Bahrain -0.4%

Kuwait -5.2%

GCC Chemical Industry

Source: GPCA Questionnaire 5.9%
Note: GPCA member companies only

The change in the industry structure is evident in the industry’s » The UAE was the fastest growing with CAGR 9.3% during
development over time. Saudi Arabia has been the industry’s 2012-2020 above the industry average
powerhouse and a regional role model in industrialization, » Saudi Arabia also grew faster than the industry average, by
accounting for nearly 74.8% of the regional chemical industry’s CAGR 7.5% during 2012-2020
output in 2020. GCC chemical industry CAGR during 2012-2020
» Oman and Qatar also had positive growth rates but below
period is recorded at 5.9%.
the industry average, registering CAGR 1.5% and 0.8%
Although combined petrochemicals capacity for the GCC respectively during 2012-2020
producers is increasing, country performance shows a different » Smaller producers (Bahrain and Kuwait) recorded negative
dynamic: CAGR -0.4% and -5.2% respectively during 2012-2020

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 7
 Feedstock Supply
The industry’s feedstock mix is tilted towards
lighter molecular weight hydrocarbons
Figure 4: GCC Chemical Industry Feedstock

-5.7%
84.6
79.8

+4.3% -44.3%
559.6
39.5 41.2

311.8
+102.5%
+2.7%
104.3 -13.9%
4.5 4.7 51.5
0.7 0.6
Natural Gasoline (NG) Methane (MMSCFD) Ethane (MMSCFD) Propane (1000 BPD) Butane (1000 BPD) Crude Oil (1000 BPD)

2018 2020 E

Source: GPCA Questionnaire, 2020 is estimated

Note: GPCA member companies only. Graph does not include feedstock consumption in Qatar. 2020 estimates

GPCA member companies reported a decline in consumption Demand from petrochemical manufacturers that use ethane
of three chemical feedstocks during 2019: natural gasoline by and methane as feedstock drove consumption of these two
5.7%, propane by 44.3% and crude oil by 13.9%. Consumption feedstock inputs through 2019. Consumption of ethane
of other feedstocks, namely ethane, methane and butane has increased by 2.7% and methane by 4.3%. This is estimated the
increased, although at different speeds. Butane consumption same for 2020. Increasing consumption of these two feedstocks
witnessed the highest growth rate, which has more than signals a positive trajectory in availability of these feedstocks
doubled compared with 2018, recording a growth of 102.5%. in the region and production of competitive basic chemicals.
2020 estimates remain the same as 2019 numbers. Subsequently, the industry was able to produce derivatives of
these basic chemicals, adding value to the local economy.

8 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 Sales Revenue
GCC chemical revenue declined for the second
year in a row due to deteriorating prices of
chemicals globally
Figure 5: GCC Chemical Industry Revenue (USD billion and Y-O-Y growth)

100 96.5 100

91.0 92.6
86.1% 88.1
90
83.8
80 75.6 74.0
72.0
67.3 68.4
70
50
60 30.9%
USD Billion

54.1

Growth Rate
50 13.3%
3.3% 5.9% 2.7%
40 36.2 -4.0% -4.8%
0
30 -18.4%
30.9% -20.9%
! -18.4%
20

10

0 -50
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: GPCA Questionnaire, 2020

Note: GPCA full member companies only

GCC chemical producers of basic, intermediate chemicals, and Corporate sales declined by 20.9% in 2020 reaching about USD
commodity polymers found it particularly difficult to deal with 54.1 billion, levels seen more than a decade ago.
the deteriorating market conditions that the year 2020 brought.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 9
 Revenue by Segment
Revenue deterioration has affected most of
the business segments of the GCC chemical
industry, albeit to a varying degree

Figure 6: GCC Chemical Revenue by Product Segment (2020 share and growth estimates)

2020 Growth

Fertilizers
Fertilizers -8.9%
10.5%
Basic Chemicals,
Intermediates
Polymers -12.3%
12.3%
2020
Total 51.2% Polymers Value Added/ Specialties /
-19.8%
54.1$ bn Performance chemicals

25.9% GCC Chemicals Industry Average -21.0%

Value added,
Specialties,
Performance chemicals Basic Chemicals &
-21.5%
Intermediates

Source: GPCA Questionnaire, GPCA Estimates, 2020

Note: GPCA full member companies only

The hardest hit on revenues during 2019 was taken by the GCC polymers, which is the highest revenue generating
basic and intermediates segment registering a 21.5% decline segment, accounting for nearly half of the region’s sales, saw a
in revenue and there are expectations that 2020 will become sharp 18.2% revenue decline in 2019. Prices have bounced back
another challenging year for producers with the industry in the latter half of 2020 which may help the industry recover
witnessing a -21% decline in average revenue. some of the losses incurred in previous quarters registering a
12.3% decline in polymer sales, a 5% recovery from 2019.
Specialty chemicals segment which generates about one-third
of the GCC sales was also impacted in 2019 which resulted
in revenue decline by 19.8% and our estimates account for a
similar decline in 2020.

10 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Revenue by Country
Following a challenging year for revenue
growth in 2019, more financial constraints were
experienced by GCC producers in 2020
Figure 7: GCC Chemical Revenue by Country, 2020 share)

Oman Bahrain -55.2%

Kuwait
0.5%
UAE 5.3%
-49.3%
2.5%
8.8%
Qatar -23.0%
5.2%

2020 Total -21.0%

54.1$ bn

-16.3%
77.8%
-14.5%

Saudi Arabia

-8.4

Source: GPCA Questionnaire, 2020

Note: GPCA full member companies only

For all major producers in the GCC, 2019 and 2020 were difficult In 2020, Saudi Arabia, with the largest volume output and
years with performance under pressure. Sales figures declined chemical sales revenue, generated an estimated USD 42.1
year-on-year by 21%. This echoes the global trend during 2019 billion in revenue, representing 77.8% of region’s total sales. Due
and 2020 which saw commodity-oriented players experiencing its major share, the growth trends in Saudi Arabia impacts the
significant downturns in sales. entire region.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 11
CHAPTER 2:

INDUSTRY’S
SOCIO-
ECONOMIC
IMPACT
GDP Contribution
GCC chemical industry’s contribution to GDP
declined slightly to about 2.6%

Figure 8: Chemical industry contribution to GCC GDP by country, 2020 Estimates

4.2%

3.7%

3.0%

GCC 2.6%
2.1%
1.9%

1.3%

Oman Qatar Saudi Arabia Bahrain Kuwait UAE

Source: GCC Statistical Authorities, GPCA Estimates, 2020

Note: GDP at Current Prices

In 2019, the GCC chemical industry, one of the largest Kuwait and the UAE have lower than the region’s average GDP
manufacturing sectors in the region, contributed about 2.9% to contribution from chemical industry.
the regional GDP and is estimated to contribute about 2.6% to
regional GDP in 2020. In Oman and Qatar, the chemical sector’s In 2020, the industry’s value add is expected to decline in line
contribution is significantly larger than in other countries with with industry sales and overall GDP deceleration in the region.
an 4.9% and 4.0% respectively in 2019 and an estimated 4.2% GCC manufacturing value added is expected to decline by up
and 3.7% in 2020. Not far behind is Saudi Arabia, with about to 10-11%, higher than the overall GDP contraction of 5.7%. This
3.4% share of the chemicals industry to the GDP in 2019 and may impact the overall contribution of the chemical sectors to
an estimated 3.0% in 2020. Other countries, namely Bahrain, the GDP in the downward direction.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 13
 Manufacturing GDP Contribution
GCC chemical industry’s contribution to
manufacturing GDP averages 25.7%, led by
Qatar
Figure 9: Chemical Industry Contribution to GCC Manufacturing GDP by Country, 2020 Estimates

45.0%

30.8%
27.6%
GCC average
25.7%
18.6%
16.1%
13.0%

Qatar Kuwait Saudi Arabia UAE Bahrain Oman

Source: GCC Statistical Authorities, GPCA Estimates, 2020

Note: GDP at Current Prices

In 2020, the GCC chemical industry contributed an estimated share of the chemicals industry to the manufacturing GDP in
25.7% to the regional manufacturing GDP. In Qatar, the chemical 2020. Other countries, namely Bahrain, Kuwait and the UAE
sector’s contribution is significantly larger than in other countries have lower than the region’s average manufacturing GDP
with an estimated 45.0% contribution. Not far behind, Kuwait contribution from chemical industry.
and Saudi Arabia, with about an estimated 30.8% and 27.6%

14 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 Direct Employment
With industry consolidation gaining momentum,
the GCC chemical industry’s employment
declined by 4.9% in 2019 and 1.9% in 2020, for
the first time in a decade
Figure 10: GCC Chemical Industry Employment (thousands)

+4.1%

180 9.0% 9.0% Growth Employment 10

8.8%
170 9

6.7% 159.9 8
160
150.7 152.4 7
7.4% 148.6 149.5
150 6
4.8% 4.9% 139.3
140 3.6% 6.1% 5
127.8 4
130
Employment (‘000)

123.4

Growth (y-o-y)
3
120 114.9 1.4% 2
109.6
110 1
100.5
100 95.9 0

90 -1.9% -1
-2
80
-3
70 -4.7% -4
60 -5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: GCC Statistical Authorities, GPCA Estimates, 2020

Note: Includes GPCA member and non-member companies, and 2020 is preliminary

The reduction of well-paying jobs provided by the chemical One of the reasons for this job loss is the ongoing industry
industry is worsening the industry’s contribution to the economy. consolidation and optimization of operations which was taking
In the GCC, the chemical industry’s employment has declined place in 2019 and expected to continue into 2020, along with the
by 4.7% in 2019 and 1.9% in 2020, for the first time in a decade, COVID-19 pandemic-induced lockdowns which have created
which corresponds to about 10,300 jobs, reaching a total of highly uncertain labour market. Other factors such as the
149.5 thousand jobs. digitalization drive have had a smaller impact.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 15
 Direct Employment by function
GCC chemical producers are adjusting their
workforce in response to the current and future
challenges
Figure 11: GCC Chemical Industry Employment Growth by Function (thousands and % change)

35 -8.3%
34.1
34
2018 2020 E
33 2019
-0.8%
32
-12.5%
Employment (‘000)

31.2
31.0
31 +2.8%

3.3 3.4
3.0 +18.5%
3 +16.6% -1.8%
+1.1%
2 +31.2% -60.8%
1.5
1.3 1.3
0.9 1.0 1.0
1 0.7
0.4 0.4
0
Manufacturing Administration Supply Chain Sales & Marketing Research and
Innovation
Source: GPCA Questionnaire, GPCA Estimates, 2020
Note: GPCA member companies only.

GPCA member companies are redesigning their business teams in order to reach more geographies and customers.
structures to meet current and future challenges. Manufacturing/ Supply chain function remained at similar level with marginal
operations jobs have reduced by 8.3% in 2019, while jobs increase of 1.1% in 2019.
responsible for administration, supply chain as well as sales &
marketing experienced an increase. Research and innovation (R&I) saw the largest decline of 60.8%
which is due to various factors such as digitalization, open
Sales & marketing saw the highest increase in jobs in 2019, by innovation as well as cost optimization. Given the potential
more than 30%, which is a reflection of the fact that revenues are and significance of R&I to ensure the sustainable growth of the
declining, and companies are increasing their sales & marketing industry, this represents a worrying trend.

16 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Direct Employment comparison
Despite the negative impact incurred on
the labour market in the GCC, the chemical
industry fared better than the manufacturing
sector
Figure 12: GCC Chemical industry Employment Growth vs Manufacturing Employment Growth

170
Chemicals
165
-1.9%
160
155
150 -2.8%

145
Manufacturing
140
Index (2009 = 100)

135
130
125
120
115
110
105
100
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-5
-10

Source: GCC Statistical Authorities, GPCA Estimates, 2020

Note: 2019 and 2020 is preliminary

During 2019 and 2020, the slowdown in employment Employment in manufacturing will continue to be the pain point
growth was experienced by both chemicals and the overall due to social distancing measures, damaged balanced sheets of
manufacturing sector. About 2.7% of GCC manufacturing jobs manufacturers and general job insecurity sentiment. International
were lost in 2019 and about 2.8% in 2020, which corresponds Labour Organization (ILO) estimates that Arab states saw a 9%
to more than 70,000. Current job reductions exacerbated in decline in working hours in 2020 compared to 2019 and close
2020 triggered by the economic crisis and Covid-19 pandemic, to 5% will see working hours reduced to zero or other words
at least in the short term. There are already worrying signs become unemployed. Additionally, ILO classified manufacturing
emerging from unemployment statistics: in Saudi Arabia, jobs at highest risk for possible losses among all sectors.
unemployment increased to 8.5% in Q3 2020, compared with an
average 5.6% in 2019.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 17
 Direct Employment by Country
The GCC chemical industry employs almost
150,000 direct jobs
Figure 13: GCC Chemical Industry Employment by Country, 2020 (thousands)

1.3 149.5 Kuwait Bahrain

6.0 Oman
7.3
8.8 4.0%
29.5 Qatar
4.9% 0.9%
5.9%
96.6

2020
19.8% 149.5 thousands
UAE

64.6%

Saudi Arabia

Saudi UAE Qatar Oman Kuwait Bahrain GCC

Arabia

Source: GCC Statistical Authorities, GPCA Estimates, 2020

Note: Includes GPCA member and non-member companies

Among the GCC countries, Saudi Arabia stands out with the During 2020, the labour market will continue to be driven by
largest contribution to chemical industry’s employment of 64.6% developments in Saudi Arabia. In order to protect jobs, the
in 2020. It has also shown the highest employment growth over Saudi government has implemented several measures, including
the past decade of CAGR 7.7%, above the region’s overall CAGR paying salaries of Saudi employees in the private sector, allowing
of 4.1%. wage and working hour adjustments, restrictions on new hiring
from outside the Kingdom, etc. These measures were targeted
to protect existing jobs and reduce further redundancies.

18 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Indirect Employment
Every job in the GCC chemical industry creates
2.9 jobs elsewhere in the economy

Figure 14: Total Chemical Industry Related Employment in 2020 (Thousands and Multiplier)

Multiplier
Multiplier 3.9
0.9 Trade, repair,
hotels & restaurants
Financial intermediation,
Multiplier 138.1 real estate,
2 28.2% business activities

11.1%

Education,
Total 6.4%
300.8 588.4 health care
588,400
6.2%
Agriculture
29.1% 4.8%
Transport, storage &
149.5 11.9% communication
Manufacturing
Other
Direct Indirect Induced Total
Employment

Source: GPCA Estimates based on 2019 Oxford Economics study, 2020

Indirect jobs occur throughout the supply chain of chemical industry.
Induced jobs result from household spending of income earned from chemical industry.

Apart from direct employment provided by the GCC chemical The biggest sectors of total employment impact are
industry, it supports indirect and induced jobs in other sectors manufacturing with 29.1% share of total jobs supported by
of the economy. Based on GPCA estimates, every job created in the chemicals industry and trade/ repair/ hotels/ restaurants
the industry supports 2.9 jobs in other sectors. We estimate that with 28.2% share, or 337,100 jobs in 2020. Another key sector
total employment offered or supported by the GCC chemical where chemicals industry makes sizable impact is financial/ real
industry is about 588,400 people. estate/ business activities where an estimated 65,300 jobs were
supported in 2020.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 19
 Nationalization in the GCC Chemical Industry
The GCC chemical industry prioritizes
employment of national citizens and
executes nationalization agenda better than
manufacturing sector
Figure 15: Nationalization in the GCC Manufacturing and Chemical Industry (Share in Total Employment)

81% 80%
Chemicals (2020E)
68% Manufacturing
(2020E or latest available)
62%

41%

24%
18% 19% 17%
14%

1% 2%
Bahrain Saudi Arabia Oman Kuwait UAE Qatar
Source: GPCA Questionnaire, GCC Statistical Authority, 2020E
Note: Nationalization in chemicals includes GPCA member companies only. Nationalization in manufacturing is for 2019 or latest available, GPCA Estimates 2020

manufacturing. This trend of labour structure by nationality chemicals industry. In most of the countries the gap is between
remains the same as with previous years and due to the 40% and 60%.
large gap, it will be difficult for manufacturing to overtake the

20 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Women’s Participation in the GCC Chemical Industry
The GCC chemical industry is steadily
improving gender diversity, although there is
room for improvement
Figure 16: Women’s Participation in the GCC Chemical Industry (Share in Total Employment)

+1% GCC women’s

participation
14% 15%
13% 2010
2020E
+3%
- 2%
10%
10%
+ 2%
8%
8%
7% + 3%
6% 0% + 2%
6%
5%
5% 4%

3%
GCC women’s
2%
participation in
industry 2%

UAE Kuwait Bahrain Oman GCC Qatar Saudi Arabia

Source: GPCA Questionnaire, GPCA research, 2020

Note: Chemical industry includes GPCA member companies only

As gender diversity trends are gaining pace across the GCC Significant differences remain between countries. The UAE
countries, chemical companies are increasingly recognizing the registers the highest gender diversity in the chemical industry
need for increased participation of women in the industry. Since where 14% of the workforce are women, leaving a large room for
2010, more women have been employed to different roles by improvement for other GCC countries, especially in Saudi Arabia
GPCA member companies. In many cases, they were the first where women represent only 4% of workforce, the lowest in the
women to fill these rolls. This is reflected in the data from GPCA region.
member companies, showing that women hold 6% of the total
workforce in 2020 up from 3% since 2010.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 21
CHAPTER 3:

TRADE
DEVELOPMENT
 GCC Chemicals Export Volume
Following the healthy growth over the past
decade, the GCC chemical export volume is
forecasted to decline in 2020
Figure 17: GCC Chemical Exports Pattern (2009-2020) (Million Tons and % Growth Rate)

90 24.0% 25
82.5
80 6.7% 77.6 20

70 66.9 68.9 15
64.3 66.0 66.0 12.5% 66.0
62.1
60 56.8 10
53.8 5.6% 9.4% 6.4%
8.3% 4.4%
3.7%
Million tons

50 2.5% 5

Growth rate
43.4 1.4%
40 0
-1.4%
30 -5

20 -10

10 -15
-20.0%
0 -20
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 E

Growth (Y-O-Y) Export

Source: UN Comtrade, 2020

Note: 2018 is revised, 2020 is estimated

Global trade during 2019 was already impacted by the economic GCC chemical export volume is expected to decline by 15%-
slow-down, the US-China trade war and a growing drive for 20% in 2020 and reach 66-70 million tons due to significant
self-sufficiency in key markets. For the GCC chemical industry, demand disruptions in end-user industries and markets due to
exports continued to increase although at a slower rate of 6.4% the COVID-19 pandemic and economic recession.
in 2019 reaching 82.5 million tons.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 23
 GCC Chemicals Export Value (USD billion)
The GCC chemical export revenue declined for
the second year in a row, driven by depressed
commodity prices
Figure 18: GCC Chemical Export Revenue (USD billion and % Growth Rate)

75 47.1% 60
70 47.2%
63.7 50
65
60.4
60 57.2 40
55.6
55 53.5
49.7 49.1 50.4 26.5% 30
50
19.1% 43.8
45 42.3 20

Growth rate
USD billion

40 7.8% 8.6%
33.7 4.0% 10
35
30 0
25 22.9 -10.3%
-10
20 -16.2%
-18.7%
15
-13.8% -23.5% -20
10
-30
5
0 -40
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 E

Growth (Y-O-Y) Export

Source: UN Comtrade, 2020
Note: 2018 is revised, 2020 is estimated

GCC chemical export revenue mirrors the industry’s sales Chemical industry is not the only sector impacted during 2020.
dynamics. Like sales, it has been declining for the second year The US Energy Information Administration (EIA) estimates that
in a row, driven by weak chemical prices, Covid-19 pandemic OPEC 2020 net oil export revenues will be lowest in 18 years .
and gloomy outlook. In 2019, GCC export revenues declined by Crude oil and petrochemicals are inextricably linked, with oil-
10.3% and in 2020 it is estimated to decline by more than 20%. price shocks resulting in ripple effect on the chemical industry.
It is expected that 2020 export revenue will be about USD 43-45
billion, which takes the region back to 2016 level.

24 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Trade Flow by Product Segment (Volume)
Petrochemicals and polymers dominate the GCC
chemical export, while inorganic chemicals lead import
to the region
Figure 19: GCC Chemical Trade Flow by Product Segment in 2020E (Market share based on volume)

Specialty chemicals Others

Inorganic chemicals
2.7%
1.6%
1.2%
Others
Petrochemicals
Specialty chemicals
7.8% 18.1%
7.7%

Fertilizers 27.9% 37.1% GCC Import

GCC Export Petrochemicals
2020 2020
22-25 16.2% Polymers
75-78
million tons
million tons
2.1%
48.1%
Fertilizers

Inorganic chemicals

29.6%

Polymers

Source: UN Comtrade, 2020 is estimated

It is estimated that in 2020, imports accounted for about indicating a positive demand for the GCC chemicals output
one third of export volume (29%), which means for every 3.5 abroad over the time period. Import substitution for some
tons of chemical products exported, GCC countries import 1 product groups may not be possible due to their unavailability in
ton. Current export/ import ratio matches the historical ratio, the region.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 25
 Trade Flow by Segment (USD Billion)
The regional industry’s revenue is predominantly
generated by exports of polymers

Figure 20: GCC Chemical Trade Flow by Product Segment in 2020E (Market Share)

Consumer chemicals Others

Specialty chemicals
3.2% 3.0%
1.6% Others

Polymers
7.1%
Fertilizers 13.7%
Inorganic chemicals 21.7%
20.7%
GCC Import
GCC Export 2020
2020 45.5% Polymers
USD 19
USD 46 billion billion
17.3%
11.7% Petrochemicals

Consumer chemicals 1.0%

20.5%
Fertilizers
33.0%
Petrochemicals Specialty chemicals

Source: UN Comtrade, 2020E

While in volume terms petrochemicals (including basic and In contrast, fertilizers contribute 13.7% to the GCC export
intermediates) and fertilizers are the main products exported revenue or USD 6.3 billion vs their 27.9% contribution to export
from the GCC, it is the polymers which generated most of the volume. Given the lion share of fertilizers in volume terms and
export revenue. In 2020 it is estimated that 45.5% of export low share in export revenue this segment is a low revenue
revenue or around USD 21 billion came from polymers vs 29.6% generator for the GCC. Nevertheless, the fertilizer industry
polymers represented in export volume. Reflecting on high makes a profound impact on the global level, supplying
earning potential of polymer products over other commodity important nutrients and supports many countries to work
chemicals, their export revenue per ton of product is almost 70% towards their food security targets.
higher than for the total industry as an average. Combined with
large volumes, the segment is vital for revenue generation.

26 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
GCC Trade Flow with Top Partners
The GCC chemical industry trades mostly with
Asia, which accounts for nearly 70% of GCC
export
+2.3%
Figure 21: GCC Chemicals Export Flow to 6.7
Major Regions (million tons)
4.9
+8.9%
56.2
17.0
+2.3%

3.2 2006 2020

2.3 Western Europe

2006 2020

North America
+5.5%

5.2

+7.6% 2006 2020

2.5
Asia
+21.9% 6.4

4.0
2006 2020
2.5
GCC

0.2

2006 2020 2006 2020

Source: UN Comtrade, 2020
South America Africa Note: Growth in CAGR

Asia is the top destination for the GCC chemical exports North America and South America have been a traditional export
representing 68% of the total export volume or 55.9 million tons. market for GCC fertilizers. In 2019, GCC chemical exports to
Exports to Asia growth was driven by higher exports to China North and South America accounted for 3% and 4% of GCC
and India. These 2 Asian countries are the most important exports respectively. With increasing local production in North
markets for the GCC chemicals export, accounting for 23.8% America, combined with the long supply chain, the region
and 19.1% accordingly. became unattractive to GCC producers.

Western Europe is the second largest export destination for the Although exports to Africa have grown at a CAGR of 6.9%, the
GCC, importing 7.7 million tons in 2019 which represents 9% of neighbouring continent still represents huge untapped potential
GCC’s total export volume. While exports to Western Europe for the GCC producers to trade with. GCC producers need
continue to increase the growth is weaker than to other regions to move fast to establish themselves as the preferred trading
worldwide, due to rising protectionism measures and increasing partners in Africa by building key relationships and supporting
competitiveness of European producers. the socio-economic development there.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 27
 GCC holds trade surplus with major trading
regions, especially with Asia which accounts for
73% of GCC trade balance volume
Figure 22: GCC Chemical Trade flow with Major Regions (million tons)

GCC export 2020 E

GCC import 2020 E
Western Europe

Asia
6.7

1.6
56.2
North America
3.2

1.0

10.8
Africa
South America
5.2
4.0

0.3 0.3

Source: UN Comtrade, 2020

Note: Middle East excludes GCC

Asian countries play an important role in supporting the GCC While Western Europe is the second most important trading
region to achieve the positive trade balance in chemicals trade. region for the GCC, its trade balance accounts for only 9%. This
In other words, GCC exports significantly higher volume to Asia is due to chemicals import flow from Western Europe as well.
then it imports from there. Asian trade balance accounts for Relative proximity of the region and GCC’s demand for inorganic
two-thirds (73%) of the region’s total trade surplus and intensifies and specialty chemicals make Western Europe an attractive
the reliance of GCC on Asia not only for exports but also for import destination.
maintaining a positive trade balance. Trade balance with Africa
is the highest among other regions due to almost absent import
from this continent. In 2019, trade balance with Africa accounted
for 10% of GCC’s total.

28 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Top 10 export destinations
GCC chemical industry trades with about 170
countries, top 10 countries account for nearly 70%
Figure 23: Top 10 Destinations for the GCC Chemical Exports in 2020E (share in GCC exports)

India
18.4%

China

Belgium Turkey
27.7%
1.1% 3.8%
USA
Thailand
3.9%

2.5%

Malaysia
Brazil
4.7% Australia 2.8%
Singapore
5.1% 2.2%

Source: UN Comtrade, 2020

Top 10 export destinations for the GCC chemicals exports in Moreover, their combined share in the GCC total exports is
2019 remained almost the same as in the previous year. China estimated to have increased to 46% in 2020 from 43% in 2019
and India are by far the top 2 export markets. and 34% in 2018.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 29
 Top 10 import sources
Similarly, GCC imports from more than 160
countries, with top 10 accounting for nearly 65%
Figure 24: Top 10 sources for the GCC chemical imports in 2020E (share in GCC exports)

Germany
South
Turkey China Korea
1.5%
9.4%
USA 2.2% 1.5%
3%

Jordan Viet Nam

4.0% India
1.5%
8.0%
Brazil

1.5% Australia

23.0%

Source: UN Comtrade, 2020

Note: 2019 is preliminary

Like with GCC export markets, the top 10 import destinations China and India are also among the top 3 import source
represent the majority of the import volume. Australia is the markets for the GCC. Slightly above 2 million tons of chemical
main import source for the GCC which supplies the majority of products are imported from each country on a yearly basis.
inorganic chemicals to the region from overseas. Inorganic chemicals are, once again, the main product group
imported from these countries, followed by basic/ intermediate
petrochemicals.

30 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 GCC Chemicals Trade Balance
GCC chemical surplus continues to rise reaching
new high of 59 million tons in 2019, which
represents about 70% of the export volume
Figure 25: GCC Chemical Trade Balance (Million Tons)

100 100

90 90
82.5
77.6 75 - 78
80 80
68.9
70 65.3 66.9 66.0 70
64.3
62.1
56.8 57.5 59.0
60 50 - 56 60
53.8
Million tons

Million tons
49.2
50 45.5 46.5 45.3 44.9 50
43.4 44.3
41.6
39.1
40 40
30.6
30 22 – 30
21.6 23.6 25
21.1 21.1 19.7 20.0
20 16.6 17.8 20
14.7 15.2
12.8
10 10

0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 E

GCC Export GCC Import GCC Trade Balance

Source: UN Comtrade, 2020

Note: 2018 is revised, 2020 is estimated

As an export-oriented industry, GCC chemicals industry Looking at 2020, we anticipate chemical trade balance to remain
continues to benefit from trade opportunities and enjoys positive positive, although with some decline in line with reduced exports
trade balance. Over the past decade trade balance, by volume, from the region.
has almost doubled reaching new heights of 59 million tons in
2019. This is about 70% of total export from the GCC.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 31
 GCC Chemicals Trade Balance (USD billion)
Unlike chemicals volume trade balance, the
GCC chemical trade revenue balance has
made a downward move from its 2018 peak
Figure 26: GCC Chemical Trade Balance (USD Billion)

65 63.7 65
59.1 57.2
60 60
55.6
55 53.5 55
50.4
49.7 49.1
50 50
46
45 42.3 45
40.5
40 40
33.7
33.4 34.2
32.9
USD billion

35 35

USD billion
32.2
30.1
30 28.9 30
27
24.9 26.0
22.9 23.9 23.2 24.3
25 22.2 25
21.4 21.5
20 23.1 18.5 20
17.5
19.4
15 10.2 15
19.5
10 16.2 10
12.7
5 5

0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 E

GCC export GCC import GCC trade balance

Source: UN Comtrade, 2020 is estimated

Historically, GCC chemical industry had a large and growing This way, due to challenged chemical prices during 2019,
trade surplus which, on average, represented nearly 60% of the industry’s trade balance shrank by 20% and about 30%
the region’s export revenue. During industry slowdown, GCC respectively.
tends to see its balance of trade tightening, as it did during the
previous years.

32 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
CHAPTER 4:

GCC INDUSTRY’S
GLOBAL
COMPETITIVENESS
 Ethylene Cash Cost
Globally ethylene cash cost is declining, leading
to decreasing cost competitiveness of the GCC
chemical industry in the ethylene value chain
Figure 27: Ethylene Cash Cost of Regional Steam Crackers (USD / ton of C2)

Highest
(2009-2019)
1,300

1,200

1,100

1,000

900
2019 Growth
800
USD / ton of C2

700
630
600
Europe -9.6%

500

400 355
North America -6.2%
300
229
200
Middle East -5%

100

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: ICIS and Cefic Chemdata International, 2020

Note: Middle East cash cost is not based on 100% ethane feedstock

While the Arabian Gulf continues to have cost leadership in its In comparison with Europe, the GCC ethylene is 64% cheaper,
ethylene cash cost over North America and Europe, this position which is the highest cost advantage compared to other regions.
has been weakening. The cost of producing ethylene was Nevertheless, it is lower than more than the 70% advantage
twice higher or more in all the major regions in 2011-2012. Now experienced in 2010. Lower crude oil prices, which drive NGL
regional producer’s ethylene cash cost is only 43% lower than prices, brought down non-ethane feedstock costs, namely
an average for 3 regions. propane, butane and naphtha. This helped to improve cash cost
position of producers in Western Europe.
Comparing the Arabian Gulf with North America, producing
ethylene in 2019 was 35% cheaper in the ME which has declined
from 63% in 2010. Shale gas revolution in North America made
production of ethylene much cheaper in North America.

34 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Global Production Growth by Region
The GCC chemical industry grew by 1.2% in
2020, which is highest globally and is among
few areas with positive trajectory in 2020
Figure 28: Global Chemical Industry Growth by Region in 2020, Y-O-Y growth

1.2%
2020
0.3% 0.3%

-2.1% -2.2%
-2.6%

-3.6%
-3.9%

-7.25
GCC China MENA Asia Europe World United North Latin
States America America

Source: American Chemistry Council, GPCA, 2020

Note: 2020 figures are preliminary for non-GCC regions

Global chemicals output declined by 2.6% in 2020; the sharpest GCC, wider MENA and China posted much lower but still
decline in the last 40 years. 2020 growth was significantly positive output growth rates, while the rest of the regions
depressed by the drop in demand and production outages contracted in line with the global industry’s trend.
induced by the Covid-19 pandemic. During 2020, performance
among various geographies was mixed.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 35
 Global Production Capacity by Regions
The GCC chemical industry’s global market
share is rising, more than doubling over the past
two decades
Figure 29: Production Capacity of the Global Chemical Industry by Region (Million Tons and Market Share)

1,186 2,158 2,596

China 10.3%
34.4% 33.1%

Rest of Asia 29.2%

25.3% 22.4%

North America 25.1%

13.6%
13.0%

Europe 20.7% 12.3%

11.5%

6.8%
GCC 3.2% 6.5%

Rest of the world 11.4% 9.3% 11.8%

2000 2015 2020 E

Source: ICIS and GPCA estimates, 2020

Although Asia, particularly China, has been the growth engine Emerging economies like China and other Asian countries are
for the global chemical industry, there are other regions with building up their production capacities in a bid to become self-
strong performance. The most prominent amongst these was sufficient. Capacity expansion in the Asian region was growing
the GCC region, which more than doubled its global market faster than global averages. Two decades ago, in 2000, China
share, rising from 3.2% in 2000 to 6.8.% in 2020. Nevertheless, accounted for 10.3% of the market share in global production
the region is still twice as small as compared to the well- volume but this has tripled to 33.1% in 2020. Capacity expansion
established European or North American chemical industries. in China is a sign of caution for export-oriented regions like the
GCC.

36 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 Global and GCC Capacity Utilization
Global chemicals capacity utilization has been
falling while the GCC remained stable
Figure 30: Global and GCC capacity utilization
GCC
95 capacity
94 93.3% utilization
93
GCC average
92
(93%)
91
90
89
88
87
Capacity utilization

86
85
84 Global average
83 (83%)
82
81
80
79
Global
78 78.6% capacity
77 utilization
76
75
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: American Chemistry Council, 2020
Note: 2020 figures are preliminary

As new, global chemical capacity continues to come on-stream, Bucking this trend, the GCC region’s chemical capacity
accompanied by production slow down as a result of Covid-19, utilization remained stable over the past years. During 2019
global capacity utilization has fallen significantly in the past and 2020 it averaged 93% which is in line with historical normal
years. In 2019, global operating rates stood at 82.6%, which has (93%). Nevertheless, depressed commodity prices are making
deteriorated further to 78.6% in 2020. Both years trended below operating environment for the GCC producers extremely
the historical normal which stands at 83%. challenging. In order to catch up with revenue generation, GCC
producers are seeking production of higher volume which helps
operating rates.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 37
 GCC Global Share in Chemical Revenue
Due to sharp decline in commodity prices, the
GCC position in global chemicals revenue has
declined below the historical average
Figure 31: GCC share in global chemical revenue (%)

GCC Average
2.5 2.4% 2.4
2.3% 2.4% (2010-2020)
2.3% 2.1% 2.2
2.2%
2.0% 2.0% 2.0
2.0 1.9%
2.0% 1.8
1.7%
1.6% 1.6
1.5 1.4
GCC share globally

1.2

1.0 1.0

0.8

0.6
0.5
0.4

0.2

0.0 0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 E
GCC average share (2009-2019) GCC share globally

Source: Cefic Chemdata International, GPCA, 2020 is estimated

Chemical industry’s revenue and profitability in the GCC and GCC share in global chemicals sales is significantly lower
globally were challenged even prior to the pandemic. GCC than the region’s share in global production capacity. With a
basic/ intermediate chemicals producers found it particularly 6.8% share of the global production capacity, the GCC region
difficult to hold on to their positions. In 2019, GCC share in global generates only 1.6% to 1.7% of global sales. This is a reflection
industry’s revenue declined to 1.7% from 2% in the previous year of the GCC’s focus on low value, high volume commodity
and expected to remain at this level in 2020. chemicals, like petrochemical intermediates, commodity
polymers and fertilizers.

38 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Top 10 Countries in Global Chemical Revenue
Saudi Arabia region is among the top 10
geographies globally in terms of revenue
generation
Figure 32: Top 10 Countries in Global Chemical Revenue (2019 Market Share)

Top 3 Top 4 to 10
(69.1%) (17.9%)

40.6%
Rest of the world
14.8%

13.5%
13.8%
4.6%

2019
USD 4.1 3.2%
trillion
2.5%
2.1% 2.0%
1.8%
86.5% 1.7%

Top 10 countries

China EU27 USA Japan South India Taiwan Russia Brazil Saudi
Korea Arabia

Source: Cefic Chemdata International, GPCA, 2020

The global chemicals sales are concentrated within 3 main houses in the near future. Saudi Arabia is among the top 10
geographies: China, European Union and United States. countries representing 1.7% market share. The region is still
Together they generate two-thirds of global sales (69%). The only a minor player on the global arena in terms of revenue
gap with other geographies is so significant, it will be extremely generation.
difficult for other countries to catch up with these 3 main power

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 39
CHAPTER 5:

CAPITAL
INVESTMENT
GCC Capital Investments
GCC chemical producers continued to invest
in new projects in the GCC, committing USD
6.8 billion in 2019 and invested further USD 9.5
billion in 2020
Figure 33: GCC chemical mega projects adjustments in 2020

+41.0%
USD 9.5 bn

+88.5%
USD 6.8 bn

+251.6%
USD 3.6 bn

USD 1.0 bn

2017 2018 2019 2020

Figure 34: GCC Chemical Industry Investment (USD billion)

Source: GPCA Questionnaire, 2021

CAPEX of GPCA member companies is on the rise. In 2019, Several multibillion-dollar projects planned for the following five
investment reached USD 6.8 billion, up from USD 3.6 billion in years will contribute to an increase in total investment in the
2018 and increased to USD 9.5 billion in 2020. region, and these will likely increase the global share in CAPEX in
the foreseeable future.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 41
 Future Capital Investments
There are USD 71 billion worth of chemical
investments planned for 2020-2024

Figure 34: MENA petrochemical investments, 2020-2024 (USD billion)

40

35

30

25
$ Billion

20

15

10

0
Egypt Oman KSA Iran UAE Kuwait Qatar Algeria Bahrain

Planned Committed

Source: APICORP, 2020

Despite considerable reductions in global investments, there Some projects have already been announced to be delayed or
are about USD 71 billion of planned and committed investments configurations to be reconsidered. At the same time a number
for 2020-2024 in the GCC chemical industry. However, there of mega projects such as Amiral and Ma’aden Phosphate 3 in
are concerns that petrochemical companies in the region may Saudi Arabia and Borouge 4 in UAE are still on track.
hold on from bringing additional capacity before the demand for
chemical products completely recovers.

42 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
GCC Capital projects adjustments
Some mega projects saw cancellations and
delays as a result of uncertainty caused by the
Covid-19 pandemic
Figure 35: GCC chemical mega projects adjustments in 2020

Project Country Status

KIPIC - Al Zour Petrochemicals Complex (PRIZe), Kuwait Final decision delayed
Aromatics 2, Olefins 3
DRPIC - Duqm Petrochemicals Project (DPP) Oman On Hold, Project under
re-evaluation
QP & Chevron Phillips - Ras Laffan Petrochemicals Qatar Final decision delayed
Complex
SATORP - Jubail Petrochemicals Plant (AMIRAL) Saudi Arabia Still on track without changes
MAADEN - Phosphate Fertilizers Plant 3 (Phosphate 3) Saudi Arabia Still on track
SABIC & Aramco - Crude to Chemicals Plant (COTC) Saudi Arabia On Hold, Project under re-
evaluation
Advanced Polyolefins Company - Petrochemical Plant Saudi Arabia Still on track without changes
BOROUGE - Borouge 4 UAE Still on track without changes
Note: Includes mega projects only. Include future projects in the GCC only.
Source: GPCA research, 2020

The collapse of oil and petrochemical prices together with One of the major announcements was the downsizing of the
dramatically changed market dynamics in 2020, has prompted crude-to-chemicals (COTC) project in Saudi Arabia by Saudi
many GCC chemical companies to reconsider their future Aramco and SABIC. Experts believe that the project is expected
projects portfolio. As mentioned earlier, we witnessed several to go ahead anyways although with some configuration
flagship projects being delayed or put through reconsideration adjustments. Similar delays and re-evaluations are known to
during 2020, including those in Saudi Arabia, Oman, Qatar and be taking place over the Al Zour Petrochemicals Complex,
Kuwait. There are also projects which are still on track without Duqm Petrochemicals Projects, and Ras Laffan Petrochemicals
known changes. Complex.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 43
 Renewable energy investments
GCC chemical companies are pivoting towards
renewable energy to secure clean, reliable and
competitive power sources
Figure 36: Renewable energy projects and initiatives announced by the GCC chemical producers in 2020

Sabic Siraj Energy & Total &

Renewable Energy Project Marubeni
Al Kharsaah photovoltaic
Sabic announced it plans to install (PV) Solar Power Plant
4GW of clean energy by 2025 and 12GW by
2030 to provide electricity to its plants and sites QP’s JV Siraj Energy together with Total and
in Saudi Arabia Marubeni announced Al Kharsaah photovoltaic
(PV) Solar Power Plant, which is the first large-
Sabic
scale solar power plant being developed in
Yanbu Solar Power Plant Qatar
Sabic announced it plans to develop
a Yanbu solar project, which is the first large-
scale initiative of its kind in Saudi Arabia by the
ADNOC
private sector and it is a flagship project for Renewable Energy Projects
SABIC. At 300MW, the solar PV in Yanbu will
produce enough energy to operate all Sabic's ADNOC announced it plans to
local operations during the day double its renewable energy portfolio in the next
10 years

Sabic OQ
Solar Plant in Cartagena Renewable Energy Projects
(Spain)
OQ announced it plans to
Sabic announced it plans to build a solar power develop a sizable portfolio of alternative energy
plant at its polycarbonate facility in Cartagena, Spain projects envisioning investments in solar and
and become he world’s first large-scale chemical wind-based ventures, as well as industrial scale
production site to be run entirely on renewable production of green hydrogen, green ammonia
power. Solar power plant will have 100MW PV and green water
capacity and will become operational in 2024

Projects announced in 2020 include: Sabic has set a target of years. Similarly, in Oman, OQ has pledged to develop a portfolio
4GW of clean energy by 2025 and 13GW by 2030 to provide of renewable energy projects including solar, wind power, green
electricity to its plants and sites in Saudi Arabia; transformation water and others. Qatar’s QP got involved in a solar power
operations in Yanbu by providing electricity generated by its plant development through its JV with Qatar Electricity & Water
Yanbu solar power plant. In the UAE, ADNOC has announced Company, Siraj Energy.
plans to double its renewable energy portfolio in the next 10

44 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Circular economy investments
GCC chemical industry is taking a proactive
approach towards circular economy
Figure 37: Circular economy initiatives announced by the GCC chemical producers in 2020

Equate ADNOC
Equipolymers (EQP) Viridis 25 Recycled Carbon Capture Program Expansion
PET
ADNOC is building on its position as one of the
Equate started production of a new food grade least carbon-intensive oil and gas producers in
PET which uses 25% of chemically recycled the world by significantly expanding its CCUS
PET as feedstock, significantly reducing the program by utilizing innovative and cost-
need for virgin PET, thereby helping close the effective solutions that make economic sense
loop in the circular economy

Sabic Alliances for Global Sustainability &

TRUCIRCLE initiative Veolia
KIZAD Food Grade Polyethylene
SABIC’s ground-breaking TRUCIRCLE solutions Terephthalate (PET) Recycling Plant
encompasses the company’s circular materials
and technologies including certified circular ADNOC is building on its position as one of the
polymers from the chemical recycling of mixed least carbon-intensive oil and gas producers in
plastic waste; certified bio-based renewable the world by significantly expanding its CCUS
polymers; new polycarbonate (PC) based on program by utilizing innovative and cost-
certified renewable feedstock; and mechanical effective solutions that make economic sense
recycled polymers

Several projects, initiatives and commitments were made ADNOC launched a carbon capture expansion program
during 2020 in the GCC. In Saudi Arabia, SABIC announced during 2020. Also, in the UAE Borouge continues its strategic
its TRUCIRCLE Initiative early in 2020 to help close the loop on partnership of Project STOP, which aims to achieve zero leakage
plastic recycling. Similar developments took place in Kuwait with of waste into environment, increase resource efficiency and
EQUATE starting production of a new food grade PET which recycle more plastics.
uses chemically recycled PET as feedstock. In the UAE,

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 45
 Nationalization in the GCC Chemical Industry
The regional chemical industry is fulfilling the
governments’ agenda in creating jobs for GCC
nationals
Figure 38: Employment nationalization in the GCC Chemical Industry (Share in Total Employment)

- 3%
+ 10%
84%
81% 80% + 10%
+ 2% 2010

71% 2020E
69% + 17%
68%

61% 63% 62%

+ 10%
48%

41%

30% +3%

23%
18%

Bahrain Saudi Arabia GCC Oman Kuwait UAE Qatar

Source: GPCA Questionnaire, 2020 Estimates

Note: GPCA member companies only. Nationalization is the share of national citizens in total employment.

The GCC chemical industry plays an important role in achieving in a bid to resolve structural, labour market imbalances
sustainable growth of private sector job creation for nationals. In developed over several decades in the region, despite the recent
2020, GPCA member companies reported a 71% nationalization challenges the pandemic has instilled on the industry.
rate, which is a significant improvement from 61% in 2010. This
positive change is a result of efforts to nationalize the workforce

46 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Emergence of the green hydrogen
Green hydrogen is gaining the attention of the
GCC chemical industry
Figure 39: Green hydrogen projects announced in the GCC during 2020

ADNOC
Green Hydrogen Based
Air Products and Acwa Power
Ammonia Plant
and Neom Green Hydrogen
Based Ammonia Plant Investment and capacity not
announced
USD 5 billion, 650,000 tons per day of
hydrogen, 1.2mn tonnes per year of
green ammonia

Sohar Port and

Free Zone Green
Hydrogen Plant

Investment and capacity not

announced
Sabic and Saudi Aramco
Environmentally Friendly Blue
Ammonia OQ
Green Hydrogen
Saudi Aramco and Sabic dispatched first
shipment of environmentally friendly blue
Based Ammonia
ammonia Plant

Investment and capacity not

announced

Source: GPCA Research, 2020

Green hydrogen produced by using renewable energy sources in the GCC region. These projects are important as green
(wind or solar) is gaining attraction in the GCC region as a hydrogen has been widely presented as they key step towards
potential to provide clean power for manufacturing. During decarbonization. Meanwhile, in Saudi Aramco and Sabic have
the past year we saw the rise of announcements within green made the first shipment of environmentally friendly blue ammonia
hydrogen and green hydrogen-based ammonia segments produced in Saudi Arabia during 2020.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 47
CHAPTER 6:

R&D
INVESTMENT
 GCC R&D Investment
GCC chemical R&D investments are starting to
stabilize, reaching an estimated USD 428 million
in 2020, but the region needs improvements to
enhance its competitive position

Figure 40: GCC R&D investment (USD million and R&D Intensity)

1.0%
800 0.8% 0.8% 1.0
732 0.7%
0.6% 0.6% 0.5%
700 0.4% 0.4% 0.4%
0.3% 0.5
592
600 -10.7%
535
0.0
480

R&D Intensity
USD Million

500
439 438 428
400 385 372 -0.5
293 296
300
-1.0
200
-1.5
100

0 -2.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

R&D Intensity R&D Investment (USD million)

Source: GPCA Questionnaire

Note: GPCA member companies only; R&D Intensity is the share of R&D investment in sales

According to the annual survey of GPCA member companies While R&D investment in absolute figures is an important
conducted in 2020, R&D investment by the GCC chemical indicator, the R&D intensity (measured as share of R&D
producers reached USD 480 million in 2019. This is 9.4% higher investment in sales in the chemical industry) in the GCC has
than in the previous year and exceeds a long-term average improved from 0.5% in 2018 to 0.7% in 2019 and slightly
growth of 5.6% per annum. Challenged by the pandemic, R&D increased to 0.9% in 2020. This is still behind the leading
investment dropped slightly to USD 428 million as companies regions such as South Korea (4.6%), European Union (2.1%)
are reviewing and rationalizing their research portfolios. and the United States of America (3%), and represents an
important opportunity for the regional industry to enhance its
competitiveness.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 49
 Global R&D Intensity
GCC R&D intensity is improving, although still
low compared to the global average

Figure 41: Global R&D Intensity (%)

+0.1%
+0.7%
4.1%
4.0%
2.1% +0.1%
+0.1%
1.8% -0.4%
1.7% 1.7%
1.6% 1.6%

1.4% +0.3%
1.2%
2019 Global Average 1.3%
1.0% +0.4%

0.7% 0.7%

0.4%

Japan South Korea USA EU India China GCC

2010 2020 E

Source: GPCA Questionnaire, 2020 is estimated

Note: GPCA member companies only; R&D Intensity is share of R&D investment in sales.

On a global level, R&D intensity among businesses in the Although the GCC has been, and still is, lagging from its main
chemical sector has remained unchanged over the past decade competitors in terms of R&D intensity, its improvement between
at around 1.3%. Among key markets, no significant only a few 2010 and 2020 is one of the highest compared with main
marginal changes were observed since 2010. producing geographies. GCC R&D intensity improved by 0.3%
since 2010, same as in China and was overtaken only by South
Korea where R&D intensity improved by 0.7%.

50 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 Global R&D Investment
Globally chemical R&D investments reached
USD 51.6 billion led by China, EU and USA
Figure 42: Global R&D Investment (USD billion)

Switzerland
1.5% GCC
India 0.9%
55 +3.6% 24 3.2% Rest of the world
51.6 51.6
22 South Korea 4.6%
50 48.5 48.6 4.1%
46.8 47.0 47.0 20
44.5 45.2
45
18 Japan
40 38.4 15.6% 14.8%
16
36.2
35 14

Growth rate
China
USD billion

12 32.1%
30 2019
10
25 USD 51.6
8 billion
6.3% 6.2%
20 6
3.6% 3.4% 3.3%
15 4
1.7% USA
2 18.5%
10 0.2% 0.0%
0
5
-3.1% -2
0 -4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 EU27
20.3%

Source: Cefic Chemdata; GPCA, 2020

Global chemicals R&D investment was USD 51.6 billion in 2019 While the GCC’s R&I investments made significant improvement
and led by most of the major chemical producers. Since 2009, over the past decade as well, its global share is only 0.9%, which
the global chemical industry spent almost 45% more on R&D, is significantly lower than GCC’s share in global sales (1.7%) or
showcasing the increasing importance of innovation for chemical production capacity (6.8%).
producers.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 51
 GCC R&D Personnel
The GCC chemical industry is rationalizing
its R&D teams to respond to fast changing
demands in end user industries
Figure 43: Personnel Engaged in R&D in the GCC Chemical Industry (number of employees)

-2.4%

-60.8%
0.6%
1,100 0.65
1,014
1,000 0.60

0.5% 0.55
900 0.5%
0.50

Share in total employment

800 755
0.45
700
R&D personnel

0.40
600 0.35
496 0.3% 0.30
500
397 0.25
400
0.20
300
0.15
200
0.10
100 0.05
0 0.00
2010 2017 2018 2019

Share in total employment Personnel Engaged in R&D

Source: GPCA, 2020

Number of researchers is known to be one of the important by the corporate organization. Fast-changing customer
indicators of R&D capabilities. GPCA members reported a demands, and rapidly evolving technologies are forcing
decline in the number of researchers in 2019 compared with organizations to be adaptable, flexible, and result-oriented. This
the previous year. A total number of 397 in 2019 is 60.8% lower call for organizations to be more agile, flexible and ensure that all
than in 2018 when there were more than 1,000 researchers concerned stakeholders are involved. There is also an increasing
and estimated to drop by 1.8% in 2020 reaching 390 R&D need for R&I to be supported by non-R&D personnel (marketing,
capabilities. customer service) and external experts. All these trends and
requirements ultimately can affect the headcount of permanent
This is a negative sign for the GCC innovation landscape; we team members in R&D departments.
also admit there are emerging trends on how R&D is performed

52 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
 GCC Chemical Inventions
There were 2,461 chemical patents in the GCC
region over the past decade

Figure 44: Chemical Innovations in the GCC region

500 472
442 Total (2020-2009) Process 1,629
450 2,461 innovations
409 Catalyst 1,053
400
328 Cracking 661
350
329 Polymer/ Plastic 524
300
265
Composition 429
250
Solvent 423
200 166
150
Drilling fluid 363
Cement/ Ceramics/
100 297
Refractories
45 Product 244
50
5 0 0 0
0 Purification/ separation 145
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
E

Note: Year refers to timeline of an activity (priority filings in this analysis), Innovation refers to patent received
Source: Derwent innovation, 2020

The search and review of chemical patents granted by the GCC In the GCC region, chemical processes or chemical synthesis
Patent Office (also called inventions) returned a collection of are the largest technical category with 1,629 patent families
2,461 which emerged between 2009 and 2019. While the GCC registered in the region. In corporate laboratories, research on
chemical industry continues to innovate, the rate of patent filings new synthetic methods is generally applied on commercially
with the GCC Patent Office is declining since 2012 when there important compounds. Second largest group within chemical
was record high number of inventions in one year (472 chemical inventions registered in the GCC is catalysts, defined as
inventions registered in the GCC Patent Office). inventions disclosing manufacturing method, use or regeneration
of the catalyst, or a chemical compound used as catalyst.
Catalyst technology is becoming increasingly significant in the
energy and environment sectors.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 53
CHAPTER 7:

GCC
DOWNSTREAM
INDUSTRY
 Polymer production capacity in the GCC
Due to the challenging years in 2019 and
2020 for the global polymer industry, the GCC
polymer industry dropped by 3.6% in 2020.
Figure 45: GCC Polymer Production Capacity (Million Tons and % Growth Rate)

11.7%
32 12
10.6% 29.8 30.2
30 29.5 11
27.7 28.2
28 9.0% 10
25.4 25.9 9
26
7.0% 7.3% 8
24 22.6 22.9
7
22
20.2 6
19.5
GCC Polymer Capacity (million tons)

20
5
18 3.5% 4
16

Growth (%)
CAGR (2010 - 2020) 2.1% 3
14 1.6% 1.6%
3.6% 2
12
1
10 0
8 -1
6 -2
4 -3
-2.5% -4.3%
2 -4
0 -5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Y-O-Y Growth GCC Polymer Capacity
CAGR (2010-2020)

Source: GPCA Analysis

The GCC polymer industry has grown dramatically over the tons in 2020. GCC polymers account for about 19% of the total,
past decades as the region benefited from growing demand in regional chemical capacity. As a result, the polymers segment
overseas markets. Regional polymer production capacity has has a major influence on the growth of the entire chemical
dropped to 29.5 million tons in 2019 and again to 28.2 million industry in the region.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 55
 Current polymer production by product
Polymer supply from the GCC is driven by
growing demand in end user market segments
Figure 46: 2020 GCC Polymer Industry by Product (Market Share)

LLDPE

LDPE
15.0%
10.0%

PET
3.0%
PVC
1.0% PS
0.5%
2020
28.2 5.0% Performance polymers & rubbers
HDPE
21.0% million tons

27.0%

PP

Source: GPCA Analysis2020 GPCA Member companies ONLY

Packaging, (including consumer packaged goods, food and Consumer products is the third largest market of polymer
beverages and others) which is the largest end user segment demand and utilizes various resins, including polyethylene,
globally, drives demand for polymers such as polyethylene both high density (HDPE) and low density (LDPE). Polyethylene
terephthalate (PET). However, in the GCC, PET production (HDPE, LDPE and LLDPE) represents nearly half of production
capacity accounts for only 3.0% of the total polymer capacity in capacity (46%). Such high concentration of PE in the GCC’s
2020 or 0.75 million tons. polymer industry is driven by the access to an abundant supply
of ethylene and the increasing global demand for PE as a
The construction industry is the second most important driver versatile, easy processable, and recyclable product.
of global plastics consumption. One of the important polymers
for the construction industry is polyvinyl chloride (PVC). PVC is The Automotive industry is also an emerging market for polymer
used for window and door frames, and underground pipes, due consumption, especially polypropylene (PP), where it helps to
to its stiffness and durability. PVC production in the GCC region reduce the weight of the vehicle for increased fuel efficiency. The
is concentrated in Saudi Arabia. Saudi production capacity GCC polypropylene (PP) market size in 2020 was 7.7 million tons,
reached 0.4 million tons in 2020. Production has not grown which accounted for a 27% market share of the entire polymer
proportionately with demand, suggesting that the GCC countries industry. The growth happening over the past decade is driven
have a potential for new capacity additions in the future. by the rising use of polypropylene in injection moulding, fibre, film
and sheet.

56 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Current polymer production by country
Polymer production in the region is driven
by Saudi Arabia accounting for 69.4% of the
region’s total output
Figure 47: 2020 GCC Polymer Industry by Country (Market Share)
Kuwait:
0.97 million tons

Kuwait Oman
UAE 3.5% Qatar
1.2% Saudi Arabia: Qatar:
19.6 million tons 2.8 million tons
16.0% 10.0%
UAE:
4.5 million tons

2020
28.2
million tons

69.4%

Saudi Arabia Oman:

0.34 million tons

Source: GPCA Analysis

Saudi Arabia is the largest polymer producer in the region, The UAE is the second largest polymer producer, contributing to
accounting for 69.4% of the region’s total output. While Saudi 16% of the regional polymer capacity. The UAE’s impact on the
market share in the region was declining over the past decade, GCC industry has significantly increased over the past decade.
its product portfolio is the most diversified, compared with other The country’s market share in the GCC more than tripled from
GCC countries. In 2019 it was producing about 30 products, 5% in 2009 to 16% in 2020. The UAE has also made steps to
which is the highest in the region. diversify its polymer product portfolio and added several new
products. It has plans to triple its capacity in the coming years.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 57
 Polymer intra-GCC import and export
KSA is the largest polymers producer in the GCC,
and hence the largest intra-GCC exporter. On the
other hand, UAE represents the highest share for
the intra-GCC imports.
Figure 48: Polymers’ Intra-GCC Import & Export Share 2018
1,300,000 1,241,265
1,200,000 141,460 Import [MT]
Bahrain Qatar 1,100,000
1,085,794
Kuwait Bahrain Export [MT]
Oman
3% Kuwait 0% 1,000,000
Qatar 4%
6% 5% 3% 900,000
7% 800,000
UAE Intra_GCC 700,000
Saudi Intra_GCC 17% Export 824,990
Arabia 10% Import 600,000
2018 1,099,805
2018
58% 1.5 mT 500,000
1.4 mT UAE 282,766
15%
400,000 217,057
71% 156,606 65,709
300,000
Oman 106,710
200,000 49,896 161,994
100,000 260,804 90,800 49,840 48,651
Saudi Arabia 1,189
0
71,194
Saudi UAE Qatar Kuwait Oman Bahrain
Source: UN Comtrade, GPCA Analysis, 2021 Arabia
Note: Re-imports and re-exports have been considered in this analysis

Saudi Arabia, UAE, Kuwait, and Qatar intra-GCC imports decreased by 4.3% from 2018 to 2019. In addition, negative
increased by 37.1%, 9.2% 225% and 11% respectively from intra-GCC trade balance is evident across the GCC countries
2018 to 2019. On a similar trend – except for Saudi Arabia -, the apart from Kuwait as a result of their high export activities during
intra-GCC exports increased by 29%, 4.6% and 51.6% for Qatar, this period.
Kuwait, and UAE respectively. Saudi Arabia intra-GCC exports

Figure 49: Polymers’ Intra-GCC 2018 Vs 2019 Trade Comparison (except Oman & Bahrain)
1,099,805
1,100,000 1,052,208
1,000,000
901,420 Imports
900,000
824,990 Exports
800,000
700,000
600,000
500,000
395,499
400,000
295,584 260,804
300,000
193,971 217,057
200,000 141,460 118,595 90,800
106,710
49,896 64,353 71,194 74,445 48,651 65,709
100,000
1,189
0
Saudi Saudi Qatar 2018 Qatar 2019 Kuwait 2018 Kuwait 2019 UAE 2018 UAE 2019 Bahrain Oman 2018
Arabia 2018 Arabia 2019 2018
Source: UN Comtrade, GPCA Analysis, 2021
Note: Oman & Bahrain latest available data is 2018

58 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
Challenges in developing the GCC Plastic Conversion
Industry
Continued dominance of oil inefficiencies
of past initiatives leads to the discussion
on underlying challenges that slow down
economic diversification
Challenge 1: Limited & Fragmented End User Market Park in Jubail, KSA and the Kizad Polymers Park in Abu Dhabi,
UAE, are trying to attract investors by offering easy access to
In all end use market segments, including automotive, feedstock, plug-&-play industrial units and competitive utility
packaging, or healthcare products, the GCC market is too rates.
limited in order to develop a profitable business. As per the
World Economic Forum (WEF), the overall market size of the Challenge 3: High Logistics Costs
GCC countries ranks at an average of 51 out of 141. Only Saudi
Arabia emerged in the top 20 countries worldwide in terms Freight transportation and logistics are critical for export-
of market size (rank 17). This means that most of the GCC oriented industries in the GCC. With a limited local market, GCC
countries cannot benefit from economies of scale in production, plastic converters rely on export opportunities. However, the
create opportunities or find new ways to use resources like the competitive environment is very challenging and well-established
large markets can. This leads to the reliance on exports which producers in other regions try to hold on to their market shares.
comes with its own set of challenges. Additionally, GCC converters face challenges related to high
logistics costs from the region. GCC converters need to be
Challenge 2: Low Manufacturing Attractiveness aware of these challenges when exporting goods and need to
understand they can hold a competitive edge only by producing
As companies become more globalized and can set up high quality products and solutions.
manufacturing facilities in different countries, they start relying on
a mix of indicators to assess the potential in the given location. Based on the World Bank’s Trading Across Borders ranking,
Based on this, the GCC region ranks on average 52nd in terms which measures time and cost associated with the logistical
of manufacturing sector’s attractiveness (which measures process of exporting and importing goods, GCC countries on
factors like infrastructure, labour, economy, tax policy and average are at the low end. This means that the small producers
geopolitical risks). Some sector-specific industrial parks have and traders in the GCC cannot benefit from the overseas
started to emerge in the region in a bid to promote investments markets due to tariffs, transaction costs, customs administrative
into the industry. These parks, such as the Sadara PlasChem fees, freight expenses, and border costs in the region.

2021 Facts and Figures | The GCC Petrochemical and Chemical Industry 59
 Enablers in developing the GCC plastic conversion industry
Several enablers are emerging in the GCC
region that create unique opportunities for the
downstream industries
Figure 50: Enablers of GCC polymer conversion industry development

1 5
Joint ventures
Workforce with polymer
converters
2 6
Technology Industrial clusters
acquisitions Enablers of development
GCC polymer
3 conversion
Acquisitions of industry 7
polymer development Investment in R&D
converters and Innovation

4 8
Government Support OEM
support / policies manufacturing

Source: GPCA analysis, 2020

The GCC industrial development is at a turning point as the For the GCC region, implementing industrial transformation will
GCC governments seek to diversify economies to meet the require a workforce with an advanced skillset matching new
aspirations of future generations. Much of the efforts are focused industries. Together with the availability of the workforce to take
on creating and capturing value from product exports and jobs in an expanding downstream sector, companies recognize
stimulating the development of downstream industries, including an evident skills gap. For the GCC plastic conversion industry,
the plastic conversion industry. where future success will depend on the availability of skilled
workforce, an optimistic view on the future will provide a lot of
The pressure to develop the plastic conversion industry is hope for success.
reaching a breaking point. Several enablers are emerging in the
GCC region that create unique opportunities for the downstream Technology and innovation also have a dramatic impact on the
industries. There is a strong alignment between a need to act bottom line and productivity of the plastic conversion industry.
and the ability to act in the region. The innovative companies can manage to increase up to 38% in
revenue, which is four times more when compared with growth
rates of the least innovative companies.

60 2021 Facts and Figures | The GCC Petrochemical and Chemical Industry
The Gulf Petrochemicals and Chemicals Association (GPCA) represents the downstream hydrocarbon
industry in the Arabian Gulf. Established in 2006, the association voices the common interests of more
than 250 member companies from the chemical and allied industries, accounting for over 95% of chemical
output in the Gulf region. The industry makes up the second largest manufacturing sector in the region,
producing over USD 108 billion worth of products a year.

The association supports the region’s petrochemical and chemical industry through advocacy, networking
and thought leadership initiatives that help member companies to connect, to share and advance
knowledge, to contribute to international dialogue, and to become prime influencers in shaping the future
of the global petrochemicals industry.

Committed to providing a regional platform for stakeholders from across the industry, the GPCA manages
six working committees - Plastics, Supply Chain, Fertilizers, International Trade, Research and Innovation,
and Responsible Care - and organizes five world-class events each year. The association also publishes
an annual report, regular newsletters and reports.

For more information, please visit www.gpca.org.ae

Gulf Petrochemicals & Chemicals Association (GPCA)

PO Box 123055
1601, 1602
Vision Tower, Business Bay
Dubai, United Arab Emirates
T +971 4 451 0666
F +971 4 451 0777
Email: [email protected]