GCC refiners must gear up for disruptive trends: study

GCC downstream companies need to brace for the new potentially disruptive trends that are set to impact refined product demand, according to a survey by Gulf Downstream Association (GDA) and The Boston Consulting Group (BCG).

While the refining market is expected to remain “volatile in the medium term”, the first Gulf Downstream Industry Survey said many trends are expected to potentially disrupt the sector: efficiency improvements; electric vehicles and other alternative fuels for transportation (CNG, LNG, and hydrogen); demographics; new mobility models (car-sharing/pooling); and changes in the power generation mix.

Nearly 74 percent of respondents said that developing advanced trading capabilities for refined products is either “important” or “very important” for Gulf refiners to capture more value from the growing export of refined products.

Meanwhile, 92 percent of respondents said technology and innovation were “important” or “very important” for their organisation, given the possible disruptions likely to impact the downstream industry.

“Refining is a traditionally cyclical industry, so players are used to ups and downs – nevertheless, the uncertainties lying ahead in the next decade are probably more than used to be in the past” Mirko Rubeis, partner and managing director at BCG, said in the statement.

Though capital programs of Gulf refiners are expected to increase in value or remain the same in the future, nearly half of the survey respondents believed they do not yet have all required systems, processes, and capabilities to effectively manage large capital programmes.

The survey also found that Gulf refiners face challenges to attract and retain talent, particularly within the local workforce, due to the strong competition for talent from other industries.