Iraq Gas Deal Signed

Photo : dinarddiscussions.com
Reports in Arabianoilandgas.com have confirmed that Shell and Mitsubishi are set to sign a deal for a huge project to capture the gas that is currently flared in the south of Iraq. The south of Iraq holds some 70% of the country's gas reserves

Iraq desperately needs this gas to provide power, which is chronically short supply at present, with electricity supplies to much of industry being currently rationed down in summer months, in order to ensure that sufficient power is available for domestic customers.

This mammoth project will create huge logistical challenges but is an essential part of Iraq's reconstruction. Initially, the extra gas will be required for electricity generation. However as more gas becomes available, this will also create many opportunities for downstream investment.

The Iraq Government is already giving incentives for foreign investment in the downstream sector, recognising the societal benefits that this investment will bring to the country. This investment will take some time and effort to complete but new refineries with integrated crackers and downstream plants will appear on the horizon.


Iraq - Next Petrochemicals Hot Spot?

map : http://www.state.gov/r/pa/ei/bgn/6804.htm

Having recently read the excellent analysis of 'The Journey of Post-War Hydrocarbon Development in Iraq' by Ann-Marie Carberry of Contax Partners, I wonder whether Iraq is a likely future hotspot for petrochemicals development.

Iraq has substantial oil reserves, together with very significant amounts of associated gas. Much of the gas is currently flared (estimates indicate that as much as 60% is flared).

Very recently, the International Energy Agency identified Iraq, UAE and Angola as centres of supply growth in oil and gas supplies.

Now the government has recognised and is fully committed to developing the oil and gas industry. This means huge new investment and a complete rebuild of the infrastructure, including ports and transportation networks.

However Iraq also has significant internal needs for petrochemicals as it rebuilds housing and other buildings destroyed during the years of conflict.  Current production capacity is limited - the Basrah Petrochemical Complex has a small cracker and associated downstream plants but there is nothing of the same scale as new plants in nearby GCC Countries.

As with other Middle Eastern countries, developing a petrochemicals industry also brings jobs - an essential requirement for post-war stability in the country.

The challenges will be significant. EPC costs will be higher due to the security risk and lack of skilled labour locally. Lack of infrastructure will make projects more difficult to implement.

However with abundant gas and a need to develop, there is clearly potential for those who wish to develop this region and market


DuPont to Design PetroRabigh Safety Strategy

photo : arabianoilandgas.com

Very encouraging to see this week's news that Petro Rabigh has engaged DuPont Sustainable Solutions (DSS) to assist it on its journey towards world class safety performance.

DSS will initially carry out a baseline audit and will then work with Petro Rabigh to define a detailed implementation plan.

DuPont has always been an acknowledged leader in safety performance and safety culture, so this engagement shows real commitment on the part of Petro Rabigh in achieving world class levels of safety.

As those with experience in the industry know very well, safety culture takes time and significant management effort to develop but understanding current performance and then implementing an action plan is a very effective means of moving forward quickly.

This blog wishes Petro Rabigh much sucess with this positive initiative.


DuPont Continues Focus on Megatrends

US Speciality Chemicals Major DuPont gave a global media briefing in late 2010 in which it announced the alignment of its strategic themes with future growth trends. These so called Megatrends are seen as the shapers for the future of the industry and DuPont wishes to be taking a leading position. The megatrends are

  • Increasing Food Production - recognising that the world's population continues to grow and needs to be fed
  • Decreasing Dependence on Fossil Fuels - recognising that fuel supplies are finite and that many individuals and nations are concerned about the potential for climate change
  • Protecting People and the Environment - recognising the need and desire to protect lives and preserve environments
  • Growth in Emerging Markets - recognising the global shift that is taking place at a very rapid pace
Having identified the trends, DuPont is then looking at how it can differentiate itself to deal with the impacts of these megatrends. This means changing the structure of the organisation through acquisition. It means product and process innovation. It means having people of the very highest calibre, who have roles and responsibilities fully aligned with this changing cororate vision.

More recently, in May 2011, DuPont concluded the acquisition of the Danish company Danisco, a company whose product range is a very neat fit with the megatrends outlined above.

For all chemicals and petrochemical producers, it is essential to understand the factors that will shape the future of the business and to plan and manage accordingly. Innovation is the key, whether this be in terms of organisation, in terms of process, in terms of product. Standing still and hoping for the best is not an option.


Saudi Arabia to Move Further Downstream in 2011

photo : zawya.com

According to the excellent MEED, Saudi Arabia is set to further expand its downstream petrochemicals industry in 2011 with more than $20BN of new investments. With high unemployment rates and a growing young population, the government has recognised the need to provide extra jobs for the local population.

As we move down the petchems chain, many more jobs are created, particularly if consumer goods are produced locally. The country already has a solid cracker and polymers industry with SABIC and Saudi Aramco the major players. Saudi Arabia  is not alone in this thinking, with the development of the ADBIC polymer park in Abu Dhabi.

Although plastics consumption per capita is relatively high in the region, the markets are fairly small in terms of population. So to attract international companies and bring in the knowledge and expertise, attractive investment conditions will be required.

However, where there is a will, there is a way. The fact that the Saudi Government recognises the overwhelming need to create employment, means that things will certainly happen. Watch this space!


Middle East Petchems Production Capacity Soars

photo : arabianoliandgas.com

The Gulf Petrochemicals and Chemicals Association (GPCA) has published a recent report outlining recent investment in the region.

By 2015, the Gulf region will be supplying a fifth of the world's petchems output or 155 million tonnes per annum.

Saudi Arabia remains the region's biggest producer, with some 50% of the above output.

Interestingly much of the new investment results from a political, rather than economic agenda, with governments keen to maximise employment. The logical next step from this is to also move into plastics processing. We can expect to see more polymer parks along the lines of the one being devloped by ADBIC in Abu Dhabi. However the challenge for these parks is attracting investment from industry players. The incentives are good but the parks are relatively remote from the consumer markets.

The end result is uncertain but the region has certainly become a powerful player in petchems, given feedstock availability and the political will to develop employment via petchems manufacturing. With global demand unlikely to absord all of the new capacity, there will have to be rationalisation projects elsewhere.


Employee Engagement in the New Normal

In a recent blog I highlighted the factors that are important if manufacturing companies are to thrive in the new normal.

Capability, flexibility, innovation, effectiveness were the keywords used to describe how the highest level of operational capability could be achieved.

In the current climate the focus must be on existing assets, and that of course must include our human assets, the workforce.

When applied to human beings those words spell out an engaged and effective workforce. In his 2009 report to the UK government "Engaging for Success"  David MacLeod, no stranger himself to the petrochemical industry, reported that while 90% of businesses believed that engagement impacted on business success only 25% had an engagement plan.  So the question is 'Has the impact of the New Normal changed this thinking'?

There is certainly one organisation which believes, and is doing something about it by investing in the capability of their workforce. In winning their recent UK National Training Award for 2010, Warwick International reported soaring morale and a doubling of productivity, proving once again that making progress in a way which engages employees can be good for business.

Employee engagement is not about applying a ubiquitous formula. It's about working things out for your own situation. I came across an excellent paper, written by Eric Thompson. Entitled  "Getting Involved" the paper suggests how you can make progress in your own environment.

Achieving employee engagement will not address every issue that petrochemicals manufacturers might face right now but it will certainly be a major factor in achieving success in the New Normal