Railway development to fuel GCC petrochem trade

|By TAP Staff| Trade in petrochemicals between Gulf Co-operation Council (GCC) states is set for robust growth in the coming years led by the development of the region’s rail and transport network, predicts the Gulf Petrochemicals & Chemicals Association (GPCA), the region’s longest-standing trade association.

“An integrated railway network is an important catalyst in driving increased economic integration between GCC countries as it fosters the region’s development agenda,” said Dr. Abdulwahab Al-Sadoun, GPCA Secretary General. “Railways will similarly have a positive effect on the intra-regional petrochemicals supply chain as it will enhance cross-border trade within the Gulf, while minimizing the risk of transporting chemicals across long distances.”

The GCC petrochemicals industry is an export-oriented sector. In 2012, 60.7 million tons of petrochemicals produced in the Gulf were exported to diverse markets such as China, the European Union and North America.

According to GPCA estimates, only 6.2% of exports occurred within the GCC region. “Intra-GCC chemicals trade has seen a cumulative growth of 13% over the last five years,” explained Dr. Sadoun. “This is a positive development as it signifies deeper trade ties within the Gulf.”

In the medium term, intra-regional trade is set to surge following the planned expansion of the GCC railway network. “The GCC railway network will enable the region’s petrochemical companies to optimize their supply chains,” he added.

The GCC railway network is an estimated US$200 billion venture, and will link the six Gulf countries for the first time. The project is expected to be completed by 2018, and talks are underway to connect Jordan and Iraq once the core GCC states are linked.

Post-2020, GPCA predicts that the Gulf states will be less reliant on petrochemical imports to fulfill regional demand for a whole host of products across sectors like aviation, food & beverage and infrastructure.