KPMG’s global team of chemicals experts are spending two days in Qatar on Sunday 3rd and Monday 4th November to meet with CEO’s and CFO’s of leading petrochemical companies in Qatar and discuss key issues facing this industry.
Qatar has the greatest petrochemical expansion plans than any other country in the region over the next 5-10 years and is well positioned for success. The team will be discussing global trends, new technologies being introduced, any challenges facing this industry, and sharing their knowledge from around the world.
Gopal Balasubramaniam, Qatar-based Head of Oil and Gas for KPMG in the Middle East, commented: “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.”
“This area is becoming more important due to the advent of shale gas in the US which is changing the dynamics of the global petrochemical industry. At present, much of the production of the Middle East chemical industry flows to the Asian market. However, as Middle East producers switch to more expensive oil based feedstock – due the limits on ethane gas allocations – the costs of production are starting to rise.”
The reason that this will have an impact on the Middle East was explained by Paul Harnick, COO of KPMG’s global chemicals practice, based in the US: “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 $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.”
Mr Balasubramaniam concluded: “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 market. 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 strategy will be to produce more specialized premium products which can then attract higher prices and margins.”
The team holding the meetings consists of: Gopal Balasubramaniam, Head of Oil and Gas for KPMG in the Middle East; Hilda Mulock Houwer, Global head of advisory for Energy and Natural Resources Practice, based in Abu Dhabi; Mike Shannon, Global head of Chemicals practice for KPMG, based in US; and Paul Harnick, COO of KPMG’s global chemicals practice, based in US.
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.