QATAR: 'Qatar has major petrochemical expansion plans'

Paul Harnick, COO of KPMG's global chemicals practice, based in the US remarked: "Qatar is taking good steps to continue their success in the petrochemical industry and is responding to potential threats from the international marketplace.  As US producers are now benefitting from low cost shale gas as a feedstock, it will make the US the cheapest place in the world to manufacture petrochemicals.

"Over the next five years, the US plans to invest over USD 100 billion in petrochemical facilities. When this product starts to come on-stream, much of it is likely to flow into the Asian market - putting it in direct competition with the product from the Middle East.”

Mike Shannon, global head of KPMG's chemicals practice commented: "Petrochemical companies in Qatar have some really big decisions ahead of them. They are facing the choice of defending their markets in Asia against the low cost US product - with a potential impact on price and margin.  Or, do they change their strategy and look to expand into Europe, where they will still have a significant price advantage but will have to reinvent supply chains and establish new customer relationships. One alternative strategy which many Middle Eastern chemical producers have considered, but not yet conquered will be to acquire or develop technology to produce more specialized premium products which can then attract higher prices and margins.”

Gopal Balasubramaniam, Qatar-based Head of Oil and Gas for KPMG in the Middle East, said: "The real challenge for Qatar and the rest of the Middle East chemical industry is to try to move away from just petrochemical production into some of the more specialty downstream chemical areas where increased margins can be achieved.”

"There are already several interesting developments taking place in Qatar.  Firstly, Qatar is planning to set up some SME's based on the byproducts produced by the existing petrochemical plants which will further boost the industry here. Secondly, Qatar has started to market petrochemicals through a separate entity, ‘Muntajat', which aims to improve the prices fetched by the petrochemical companies in the international marketplace”, Gopal added.

KPMG works with many of the top petrochemical companies in Qatar and the Middle East to provide strategic advice across their core functions of audit, tax and advisory services.

Source: Daily "The Peninsula", Doha; 31 Oct 2013(Syed Rashid Ali, Karachi, Pakistan)