Middle East to continue as a key supplier of petrochemicals post Covid-19

Iran has a large number of upcoming petrochemical projects in the region. Credit: GlobalData.

The outbreak of Covid-19 in China in December 2019 and across the globe since early 2020 has disrupted businesses and economic activities globally, including the Middle East. The countries in the region reported their initial Covid-19 cases in late January / early February 2020, firstly in the United Arab Emirates. The reported numbers increased sharply in the first few weeks of the outbreak, in line with the global trend. However, infection and mortality rates seem to indicate that the pandemic has not hit the region as hard as expected, as the pandemic related deaths relatively to the population, remain far below the rates experienced in some European and Asian countries.

The Covid-19 outbreak has disrupted regional supply chains and impacted workforce availability. Iran has large number of upcoming petrochemical projects in the region. However, US Sanctions in addition to low oil prices due to Covid-19 outbreak would decide the progress of these projects in the country. Upcoming projects which are under construction / commissioning and are scheduled for startup this year are expected to be most affected, as the current developments could have direct implications on these projects. Expected delays of these projects could potentially affect the outcome of projects scheduled for subsequent years.

The regional oil and gas majors are reducing their spend in response to low oil prices and disruptions due to Covid-19 pandemic. Majority of the planned projects are expected to face delays because of local workforce disruption, delays in selection of contractors and partners etc. Companies prefer to postpone FIDs wherever possible. FID of the SOCAR Turkey Enerji Aliaga project has been postponed to 2021 from 2020, delaying the start-up to 2025. Prospects for additional FIDs by the companies in the region looks more challenging.

Middle East has been a key producer and supplier of polyolefins to demand-rich markets, specifically Asia. The region’s polyolefin exports account for around one-third of the global polyolefin trade. The petrochemical demand from key end-use sectors, i.e. automotive and construction from both domestic and overseas markets have been lowered due to the pandemic, affecting the region’s production / exports in 2020. Additionally, supply disruptions and workforce shortages in these markets have elevated the challenges further.

Companies have undertaken contingency plans to minimise risks related to the outbreak on their operations and ensure business continuity and operations. Producers in the region are reducing capital and operating spend this year due to decline in oil prices and the spread of the coronavirus which has hit demand. Despite cost-control measures, few of the companies in the region intend to look for opportunities to invest in projects around the world, especially where tough market conditions have reduced investment costs. Producers to remain confident that the demand for petrochemicals would rebound in the medium-longer term as global economies are expected to recover.

Latest reports from

• Annual Petrochemicals M&A and Capital Raising Deals Review – 2019

Or to search over 50,000 other reports please visit

GlobalData Report Store

GlobalData is this website’s parent business intelligence company.