Industrial gas in the Middle East is a hot topic. The gases business has a great deal to offer industry in the region, especially at a downstream level where added value is the sought-after premium.
The eyes are very much on the prize downstream, as investment to create more added value for a barrel of oil is pondered.
While the oil rich nations were prospering as the price of oil rocketed last year, the trend wasn’t sustained and the companies recognised the need to invest further down the chain, in petrochemical projects for example.
All of which requires increased gas and input from the industrial gas community itself.
Addressing this hot topic will be the forthcoming gasworld Middle East Conference 2009, set to take place from 23rd – 24th November.
Newly announced and entitled Industrial Gases – Adding Value to End-Users, the conference will demonstrate how the industrial gas community can benefit the significant end-users of gases.
As industries strive to achieve greater efficiency and develop new and existing uses for by-product gases, this is exactly where the industrial gas business is well placed to provide its support.
Furthermore, Abu Dhabi’s Beach Rotana Hotel is exactly where the gases community needs to be this November, to explore this opportunity.
Understanding the end-user
The forthcoming gasworld Middle East Conference sets out to inform the end-users and smaller independent gas producers how they can address the challenges presented – challenges set by both local and international lobby groups and organisations.
Topics for discussion will range from the Make vs. Buy dilemma to by-product recovery, business opportunities, and safety standards in handling gases. A range of other topics will be up for debate and delegates will have the opportunity to understand the needs of the end-user.
Such a strong agenda should be of interest to those decision makers and senior level personnel of the industrial gas, equipment and financial companies alike.
But who else should be interested in the Middle East? And why should the gases industry be so interested in the Middle East?
Why the Middle East?
The resource-rich Middle East clearly has a
potent appeal for the industrial gas business, not least for its natural gas reserves and petrochemicals sector.
The region has natural resources that are geared to the oil and gas sector and downstream products. Low energy costs have, in the past, led to the development of high energy processes being established, such as steel and aluminium production.
Such industries naturally have to be catered for with industrial gas provisions, while consumer-focused applications such as food & beverages and healthcare also present a need for gas and technology supply.
A compelling opportunity is clearly there for the gases business to grasp with both hands, even during difficult economic times.
Why else should the gases community be interested in the Middle East?
The robust lure of this geography is not lost on those within our industry, as highlighted at gasworld’s inaugural Middle East Conference in December 2007.
The region is resource rich and one of the last untapped markets for gas supply & services around the world.
As ‘The New Industrial Gas Frontier’ the region is an interesting market and a largely oil-based economy.
While this lends itself to a wealth of downstream opportunities, there also exists healthy potential across a wide of other end-use applications.
Antiquated waste water treatment infrastructure in the GCC for example, is thought to be largely incapable of meeting today’s sewage treatment demands, with new replacement capacity soon required.
It’s estimated that capacity will need to more than double over the next six years and despite the onset of the deepening economic quagmire, the outlook for the GCC waste water sector remains bright.
Almost $10bn of investment in new treatment capacity is planned up to 2015, with this likely to spike industrial gas demand one way or another – whether this be oxygen consumption for water treatment processes, or the gases involved in the actual infrastructure development.
Infrastructure expansion of a different kind is also anticipated in the years to come, from Abu Dhabi to Bahrain, and the Gulf region overall.
Privately-financed roads are cited in some quarters as the ‘final frontier for Middle East infrastructure’ and ambitious plans are already underway to develop the endless, if not picturesque, desert landscape in Abu Dhabi. A modern new highway is proposed between Abu Dhabi City and the Saudi Arabian border, which it is thought would become one of the most vital transport channels in the GCC.
With contract bids expected to take place later this year and hope that work may begin as early as the first quarter of 2010, the success of this $2.5bn development could blaze a trail for further privately-financed projects in the next decade.
A number of other road network development plans are anticipated in Abu Dhabi, with estimates that the Al Ain Municipality population will escalate to one million by 2030, from just over 200,000 in 2008. The emirate’s second largest city reportedly plans to invest around $1.6bn in capital projects over the next two years.
Boosting Bahrain’s already ebullient economic position would be a hoped-for new shipping port centre, designed to make Bahrain the major shipping hub for the northern Gulf area and ensure the Kingdom maintains its leading financial services centre status under its vision 2030 plan.
Spirited steel sector
The Middle East’s steel market outlook appears to be even more ebullient, according to a respected MEED report.
Demand for steel is expected to rise again over the next five years, prompting renewed oxygen consumption. Although steel prices are expected to remain subdued for 2009, the longer term outlook seems more optimistic if oil prices rebound as expected in 2010 and economic growth & capital investment is fuelled.
Capitalising on the wave of growth in the photovoltaic (PV) industry, Masdar PV is signalling the way forward in the UAE with its investment in the solar cells sector.
As well as planned subsidiaries around the world, Masdar hopes to establish a large-scale PV production site in Abu Dhabi, initially expected to begin its first output of solar cells by Q2 2010.
Clearly this represents another gases growth driver, with our industry already deeply involved in gas supply to the PV market and The Linde Group having built-up close ties with Masdar through its recent contract award to supply all gases to the company’s next-generation thin-film production site at Erfurt, Germany.
Among other reasons for interest in the Middle East, is its relatively stable financial climate.
The International Monetary Fund (IMF) has previously suggested that Saudi Arabia, Kuwait and the UAE could go into the recession in 2009, yet contraction in all three economies could also be short-lived if oil prices rebound in 2010.
Furthermore, the IMF suggests that while the Middle East and North Africa will be negatively affected by the recession, the region is actually likely to fare better than many others.
For the industrial gas companies this notion is borne out by quarterly results earlier this year, which saw Air Liquide (for example) cite a rise in revenues in the region.
While other geographies registered a negative percentage change compared to the same quarter in the year previous, Air Liquide’s revenues in the Middle East and Africa zone demonstrated a 24.5% rise.
In addition, the UAE has moved quick to shore-up its banking system in the wake of the global financial crisis, hoping to attract foreign capital back to the country.
A new law has been passed which guarantees all bank deposits, including deposits held by foreign banks, to boost confidence in the local banking sector and ensure the region’s financial hub remains robust – with the scheme lasting until at least 2012 and ensuring business from outside is more of a risk-free prospect.
So there is really is plenty to shout about in the Middle East.
An understanding of the demands the region presents, as well as insights into safety standards, technology trends, and other topical subjects will all be presented during November’s conference gathering in Abu Dhabi.
What better way to develop a footprint in this exciting and rapidly evolving geography?