India among key emerging markets for Gulf firms, says study

Dubai, Nov 12 (PTI) As demand for petrochemical products moves East, India, with a burgeoning middle class that will number around 400 million by 2025, is among the most important growth markets for companies from the Gulf, a new study says. According to the study by Roland Berger Strategy Consultants, in order to supply new markets in a sustainable way, companies must accumulate comprehensive know-how to drive technologies, research and efficiency – either through collaborations or through acquisitions. Rising oil and gas prices, growing demand from Asia and other emerging economies and strong global competition are presenting petrochemical companies with new challenges and long-term reliable access to feedstock, technologies and markets is becoming increasingly important, the report said. The study 'Global petrochemicals: Who is really benefitting from the growth in the new world?' analyses the current situation across the petrochemical industry and outlines possible solutions. "Strong economic growth and the rise of the middle classes in many emerging economies is shifting the focus of global demand for petrochemical products eastward," Jaap Kalkman, a Partner with Roland Berger Strategy Consultants, said. In case of China, demand for petrochemical products is forecast to rise through 2015 at around 6 per cent a year, and in the Middle East by as much as 11 per cent. By contrast, annual growth rates in Europe and the US will stick at around 1 per cent. India, with a growing middle class that will number around 400 million by 2025, is one of the most important growth markets for companies from the Gulf, it said. Whereas European and US petrochemical companies enjoyed a market share of around 62 per cent in the 1980s, it had already fallen to just 30 per cent in 2010. New suppliers from the Gulf States or parts of Asia have been consistently gaining market share since the 1990s, thanks to their enormous price and transport advantages. "In recent years, new oil and gas extraction technologies have made production from unconventional sources, such as shale gas, economically viable," Roland Berger Partner Alexander Keller said. "Countries like the US and Canada have benefited strongly from the major shale gas reserves they hold and are becoming an attractive base for a lot of companies setting up refineries," Keller said. In Europe, stricter environmental protection laws mean the industry will not expand into unconventional gas feedstock. As one of the largest Asian growth markets, China cannot satisfy domestic demand for petrochemical products from its own feedstock and products. According to the report, the government is promoting the creation of local research and development clusters, especially with European and US companies to enable Chinese firms enter into partnerships with outside players or build up their own capacities. PTI