Shale Boom in the US weakens the Middle East Petrochemical Industry’s competitive status

The increased competitiveness of the United States petrochemical industry due to the discovery of large reserves of shale gas has impacted the Middle East, which is already grappling with reduced natural gas supplies. The adverse effects of these developments have been particularly felt by the Gulf Corporation Council (GCC) countries. Once the exporting hub for natural gas, the region has now transformed into an import destination as the demand for fossil fuel exceeds its supply. This demand-supply gap across most parts of the Middle East has changed the competitive dynamics in the global energy market and demands quick remedial measures.
 
New analysis from Frost & Sullivan, Impact of US Shale Gas Boom on Middle East Petrochemical Feedstocks, finds that the assessment of shale gas resources in the Middle East has assumed critical importance since yields from conventional natural gas sources are fast declining. New unconventional energy discoveries are essential to ensure sustainable gas supplies and to reenergise the region’s petrochemical industry.
 
“It will be prudent to unearth and tap the large volumes of shale gas believed to be trapped in various countries across the region,” said Frost & Sullivan Chemicals, Materials & Food Research Analyst. “The Kingdom of Saudi Arabia alone is likely to hold reserves close to 650 Trillion cubic feet. While it might not be economically viable to retrieve all these reserves, significant volumes can certainly be exploited.”
 
Despite these available courses of action, regional governments have taken a hands-off approach and not responded adequately to the decline in conventional natural gas production. The longer governments in the Middle East delay implementing restorative measures, the more drastic future corrective measures will have to be.
 
“As such, the buck ends with the governments to launch short-term and long-term initiatives to renew the region’s competitive advantage in the global petrochemical industry,” noted the Analyst. “Undertaking surveys of unconventional energy sources would be a good start as it often takes several years before energy reserves can be productively accessed.”