The Need to Diversify from the Petrochemical Industry and Engage in other Sectors

Over the past week, global consultant Tanya Johnson attended the IDEX and ADIA conferences in Abu Dhabi and the HSBC Saudi, MENA and Turkey Equity Forum in Riyadh and Dubai. After a very informative week, her thoughts are this: it is necessary to create a positive multinational partnership and foreign direct investment in the UAE and Saudi Arabia. In order to do so, while remaining competitive, a major change is necessary. 

Although the Middle East petrochemical industry has seen significant growth throughout the past three decades, because the new gas supply should be risk assessed in most Middle Eastern countries over the next few years, petrochemical producers face many challenges.

As mentioned above, the Middle East’s petrochemical industry has grown. Due to its growth, a number of companies that make up the Middle East’s petrochemical industry are currently leading global players. However, these companies face a number of challenges. In the near future, it is unlikely that there will be enough gas available to sustain further petrochemical expansion across the Middle East region beyond the next year. Moreover, should new gas become readily available, allotments will without a doubt be at a higher price.

In addition to investing in the petrochemical industry, Johnson suggests investing in technology, infrastructure and or alternative energy sources. Additionally, Tanya Johnson believes a shift away from petrochemical production and a shift towards an increase in entrepreneurship and the growth of medium sized enterprises is also a viable solution. An increase in these enterprises has a strong likelihood of a robust future financial market because the private sector can play a role for the Middle East’s increasing population.
Although the petrochemical industry is still strong, the region must understand the need to diversify and engage in additional multinational partnerships.

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