Petrochemicals Plants in the Middle East Expand but Face Challenges

A threat to U.S. and European plastics exporters is the emergence of plastics producers in the Middle East. Initially, Middle Eastern plastics firms thought they might garner competitive advantage in making products such as polyethylene (PE) at low cost due to a ready, local supply of natural gas as a feedstock. However, the boom in low-priced natural gas from American shale production is changing the marketplace and giving the U.S. a significant cost advantage of its own.

Hopes for growing global sales spurred the construction of a number of new petrochemical and plastics plants throughout the Middle East. Ethylene, a basic commodity used by the global plastics industry, is a major focus of petrochemicals plants in this region. Borouge, a joint venture between European plastics company Borealis A/S and the Abu Dhabi National Oil Co. (ADNOC), completed the Borouge 3 expansion project in Ruwais, Abu Dhabi in late 2014, and full capacity production was achieved in 2016. The project encompasses a new ethane cracker and one of the world’s largest olefins conversion units. Now, ADNOC is building the Ghasha Mega-Project, a multi-billion dollar offshore sour gas development that is expected to produce more than 1.5 billion standard cubic feet of natural gas per day. As of mid-2022, the company had secured $2 billion in contracts for the project.

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Petrochemicals Plants in the Middle East Expand but Face Challenges, Business and Industry Trends Analysis

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