Middle East to remain key supplier of petrochemicals post-COVID-19, says GlobalData
The Middle East is a key producer and supplier of polyolefins to demand-rich markets, specifically Asia. The region’s polyolefin exports account for around one-third of global polyolefin trade. However, the COVID-19 pandemic has resulted in lower petrochemical demand from key end-use sectors such as automotive and construction from both domestic and overseas markets, which has impacted the region’s production/exports in 2020, says GlobalData, a leading data and analytics company.
The COVID-19 outbreak has disrupted regional supply chains and impacted workforce availability. Iran has a large number of upcoming petrochemical projects in the region, however, US sanctions in addition to low oil prices due to the coronavirus will determine the progress of these projects in the country going forward. Upcoming projects that are under construction/commissioning and are scheduled for start-up this year are expected to be impacted the most, as the current developments could have direct implications on these projects.
John Paul Somavarapu, Oil & Gas Analyst at GlobalData, comments: “The regional oil and gas majors are reducing their spend in response to low oil prices and disruptions caused by the pandemic. The majority of the planned projects are expected to face delays because of local workforce disruption and delays in the selection of contractors and partners.
“Companies have undertaken contingency plans to minimize risks related to the outbreak on their operations and ensure business continuity and operations. Despite cost-control measures, only a small number of the companies in the region intend to look for opportunities to invest in projects around the world, especially where tough market conditions have reduced investment costs. However, producers remain confident that the demand for petrochemicals will rebound in the medium-longer term as global economies are expected to recover.”