Pankaj Oswal – Gulf companies look to SE Asia for petrochemicals

Recent excitement about the booming Chinese petrochemical industry has spread into other parts of the continent.  Major investments from Qatar Holdings ($5 billion), Dubai Drydocks World ($2.5 billion investments) and Qatar Petroleum ($4 billion) into Malaysia, Indonesia and Vietnam all announced in the last week are evidence of where the petrochemical money is headed in 2013.  Additionally, Saudi Aramco and Borouge are also developing business presences there.

Global factors including China’s economic slowdown and the maturation of wages in the country have meant that others in the South-East have become more attractive options of late.

SE Asia has proved to have quite a penchant for hydrocarbon work and so it will be likely that some focus of the product globally will be drawn to the region.

The change in flows from Middle-Eastern investors is an interesting phenomenon, but probably has a grounding more in politics and economics than in pure supply and quality terms, particularly China become less attractive by day as a source of cheap labour.  The industry will take note, and this move could place downward pressure on prices, particularly on hydrocarbon prices, across the globe.

By Pankaj Oswal