Downstream Facilities Hold Key to Global Chemical Market

The chemical and petrochemical industry in the Middle East and North Africa (MENA) has grown significantly during the last decade. The region has emerged as a well-known supplier in the global market, with increased attention on meeting international demand for downstream value-added products. As a result, public and private companies in the region are pushing to expand local downstream presence. Local governments in the Gulf Cooperation Council (GCC) are driving efforts to reduce economic reliance on oil and gas. These efforts have fueled investments in downstream chemical products. Many greenfield and brownfield chemical and petrochemical ventures are planned across MENA, including more than US$200 billion in projects announced in 2014. Saudi Arabia, Oman, United Arab Emirates and Qatar will be the dominant sources for these investments. Growth in the MENA chemical industry has increased consumption of industrial pumps. In 2013, of the US$950 million market revenues for centrifugal pumps, between 16 and 18 percent came from the chemical and petrochemical industry. The market is the second-largest source of pump revenue in the region behind oil and gas. As engineering, procurement and construction (EPC) contractors order more pumps from local manufacturers, the revenues from the chemical and petrochemical industry will witness a healthy growth rate.

Popular Pump Types

The pumps used for chemical and petrochemical process applications often handle hazardous and corrosive substances in harsh working conditions. The pump design must emphasize safety by featuring excellent liquid containment and ensuring process fluid leak containment. Because the pumps handle highly toxic or explosive chemicals, they must be self-priming and capable of running dry. Similar to other industries, the right pump must be matched with each specific application. Centrifugal pumps handle abrasive fluids and solvents at a relatively low operating cost, while positive displacement pumps handle more viscous fluids and can prime dry. Most end users prefer centrifugal pumps because of the reduced costs and fewer maintenance needs compared with positive displacement pumps. Facility managers must consider each pump's advantages and consult with both maintenance personnel and the manufacturer before making the final selection. As in the oil and gas industry, the American Petroleum Institute (API) 610 range of pumps dominates chemical process applications. When handling non-hazardous chemicals, American National Standards Institute (ANSI) certified pumps are preferred. Many private storage terminals across MENA employ inexpensive variants of ANSI pumps, such as ISO 5199 magnetic drive pumps. Double mechanical seal pumps are another option for companies focused on saving costs. The major suppliers for pumps in the MENA chemical and petrochemical industries are Sulzer, Ebara, ITT, Flowserve and Ruhrpumpen.

Advantages & Challenges

In terms of scale and output, the MENA chemical and petrochemical industry effectively competes with its global peers. Facilities are constantly scaling up product capabilities and capacity. Top-tier infrastructure, product quality and skilled workers are all hallmarks of the region's chemical operations. MENA facilities have access to the latest technologies thanks to the vastly experienced global EPCs and consultants who have migrated to the region. In addition, national governments, especially in the GCC, continue to pursue initiatives that "localize" operations by training local workers in the process industries. The combination of international expertise and local training will strengthen the value chain of EPCs, process consultants and equipment suppliers. Downstream facilities often have two requirements: access to infrastructure and abundant feedstocks. The MENA region has increased the availability of basic resources such as land, power and water, and diverse feedstocks have added value to downstream products. These two advantages have catapulted the region's standing as a popular destination for downstream facilities. Despite efforts to reduce oil dependence, the MENA region is still years away from striking the ideal balance among the oil sector and other process industries. While potential is great for downstream facilities and other investments, the volatility in the oil prices will ultimately influence whether these facilities come online. Pump manufacturers must work with local governments to diversify regional economies.