Middle Eastern Petrochemicals


The expected boost to petrochemicals exports following the lift of international sanctions did not happen in Q1 of this year, however BMI has said that they expect there to be growth in the industry in the coming months. However, sustained growth will depend on a number of factors, including permanent removal of the sanctions, improved gas feedstock supply, foreign investment and domestic market growth and BMI believes that Iran is far from securing these.

BMI have said that exports are crucial to the Iranian petrochemicals industry, as the domestic market is in a slum and is unable to absorb the rapid increase in production capacity. Iran’s petrochemical exports rose by only 1% year on year to US$ 10.72 billion in the 2013/14 Iranian year. In terms of volume, exports declined 4% year on year to 14.5 million t. The outturn was far lower than the government’s target of 17.4 million t of petrochemical exports, valued at US$ 13 billion, indicating that the industry had been hi hard by the international sanctions regime.

When it comes to investment, Iran requires US$ 31 billion to initiate 60 semi finished petrochemicals projects of which an estimated US$ 5 billion has already been spent. The projects are expected to increase the country’s petrochemical output by 55 million tpy once they come onstream.


BMI has said that Israel’s petrochemicals sector is likely to remain focused on domestic sales and is not expected to rival other markets in the region at the moment due to a lack of upstream activity. And while many Arabian Gulf States have developed petrochemicals industries on the back of their domestic gas and oil production, Israel’s production is negligible. BMI believe that feedstock availability constraints will limit growth in potential capacity expansion. Israel has a weak reserves position, but offshore gas strikes suggest reserves could grow. Such major finds could prompt a significant fall in Israel’s dependence on oil and gas imports, but these discoveries are unlikely to come onstream for several years.

On a positive note, BMI expect private consumption to recover this year and industrial production should also lead to growth in petrochemicals consumption over the next two years, supported by exports. In the long term, BMI expect private household consumption, currently under pressure due to austerity measures, to take the lead, augmenting the gains in exports. BMI over all expects the Israeli petrochemicals market to enjoy medium term growth.


Despite Kuwait’s Petrochemical Industries Company (PIC) planning to increase its petrochemical income to make up more than 50% of the country’s non-oil income, BMI has said that further value added to petrochemicals is essential to developing the production chain and ensuring that the industry is buffered from the effects of increased competition in external markets.

Kuwait, in BMI’s opinion has formidable reserves and growing upstream production, which should sustain petrochemicals output. A diverse feedstock also enables a more diverse range of downstream products, putting Kuwait at a competitive advantage against ethane dependent producers in Qatar and Saudi Arabia. But, the downside is that the government’s domination of upstream and downstream sectors stifles the investment climate within the country and ultimately diminishes the country’s export potential as large investment is kept at bay and never fully realised.

Edited for web by Claira Lloyd

Published on 30/05/2014

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