A number of opportunities are waiting to be realised in the rapidly emerging Middle East industrial gases business, despite the creation of a ‘Jeckyll and Hyde’ scenario in the market as a result of the crash in global oil prices.
That’s the view of John Raquet, founder and CEO of gasworld and a consultant of the company’s Business Intelligence unit.
Raquet was speaking at the MENA Industrial Gas Conference 2015 in Dubai, UAE, where more than 300 industrial gas professionals have gathered to discuss and debate the opportunities ahead in the region’s gases industry, and showcase their capabilities.
Earlier presentations had set the scene for the conference, describing the respective challenges and opportunities facing the Middle East and North African industrial gases business, and underlining the attractiveness of this market against a backdrop of challenging climates in many parts of the world.
Raquet acknowledged this environment as he discussed comparatively sluggish growth for the industry over the last two years.
“In 2014, the global gases business was valued at $78bn. Growth in 2014 was 2.5%, one of the lowest growth rates we’ve seen in a while. In 2015, growth is currently running at around 1.5%, with the BRICS struggling and even more challenging times in Europe and Japan. But the picture of underlying growth does look much more positive,” he said.
“In terms of the industrial gases EBIT margin, the good news is that this margin is at an all-time high, averaging 17% of sales. So while growth has been lowered, the gas companies have focused inwards and greatly improved profitability.”
Homing in on the MENA market, Raquet explained, “In the MENA region, including Turkey, Algeria, Egypt, Libya, Mauritania, Morocco and Egypt, the market was valued at around $2.5bn in 2014, dominated by the Middle East (85%),” he said. “But there are still a large volume of gases that are produced and used by the end-users themselves, so if these volumes were converted to outsourced supply, the potential numbers would be significant.”
Other drivers for growth included notable end-users in healthcare, oil and gas services, water treatment, beverages and food processing and, in certain countries, manufacturing.
Raquet referred to the importance of political stability in enabling further industrial gas growth in the future, particularly in many North African countries, but also reserved comment for the opportunities created by what he described as the Jeckyll and Hyde scenario instigated by sustained low oil prices. These, he urged, should not be overlooked.
“The oil price dilemma presents the region with a Jeckyll and Hyde situation; lower funds means the project investment must come down, however opportunity is created through the need to migrate away from oil to downstream products and other industrial sectors.”
“I believe the Middle East still has a natural cost-competiveness in feedstock, though that has certainly shrunk in the last few years,” he added. “The opportunities also still exist in the merchant market to roll-out the application know-how and technologies.”
Around 275 delegates from 25 countries gathered at the Jumeirah Beach Hotel in Dubai, UAE for day one of the MENA Industrial Gas Conference 2015, highlighting the significance of the region to local and international companies alike. A further 40+ visitors attended the event’s promotional booth programme, featuring more than 40 exhibitors from the global industrial gas and equipment business.
Follow the conference
Keep abreast of all the latest news, views and developments at the MENA Industrial Gas Conference 2015 via the gasworld website, updated throughout the day.
A full review of the conference will also be published in the upcoming January edition of gasworld magazine.