Petchem sector needs cost-cutting measures, says SABIC CEO

The GCC petrochemical sector could use more merger and acquisition (M&A) activity, as well as consolidation measures in order to cut costs and improve efficiency, said Yousef Al-Benyan, chief executive of Saudi Arabia Basic Industries Corporation (SABIC).

“I believe the only way for our industry to survive and thrive in the global marketplace is by creating synergies,” he added while speaking at the annual Gulf Petrochemicals and Chemicals Association in Dubai on Monday.

The industry would be able to reduce its costs through synergies and optimization, he said.

Gulf petchem producers also need to focus their efforts on manufacturing products and competing for specialty applications to create more revenue in the region, he said, while adding that diversification is the way forward to tackle challenges facing the industry.

The CEO also talked about the need to improve asset utilization for the company, which is the largest petchem producer in Saudi Arabia and the Middle East region.

"Many of our complexes are standalone with limited or zero interconnections. This limits our ability to optimize production when product prices move."

Petrochemical prices have continued to fluctuate over the past two years, closely trailing volatile oil prices, which have more than halved since June 2014.

In the first nine months of 2016, SABIC’s net profit declined 15 percent to SAR 13.4 billion mainly due to lower average selling prices of products. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com and

Reem Abdellatif at reem.a@argaam.com