Gulf petchem boom faces cost, labour challenges

ABU DHABI Jan 20 (Reuters) - A shortage in skilled labour and rising construction costs are hindering a boom in the Gulf Arab region's petrochemicals industry, Qatar's energy minister said on Sunday.

"This region is facing a shortage of skills and prices of contractors are high. This is a big problem as it affects construction and is a big challenge for us in the petrochemicals industry," Abdullah al-Attiyah told a conference in Abu Dhabi.

"The petrochemicals sector is seeing rapid growth with huge investments in some of the Gulf Cooperation Council countries and we must find a way out," he said.

Soaring construction costs could lead to delays and even the cancellation of petrochemical projects, Chief Executive of industry heavyweight Saudi Basic Industries Corp 2010.SE (SABIC) Mohamed al-Mady said in December. SABIC is the world's largest chemical-maker by market value.

However, investments in the Gulf's petrochemicals sector were poised to almost double by 2020 compared to last year, Mohammed bin Kharbash, the United Arab Emirates' minister for financial and industrial affairs told the conference.

"At the end of 2007, investments in this sector totalled about $70 billion and in 2020 they will exceed $120 billion. The petrochemicals sector is an important growth component of the Gulf's overall industrial sector," he said.

The six members of the GCC loose political and economic alliance -- Saudi Arabia, Kuwait, Oman, Qatar, UAE and Bahrain -- will account for some 20 percent of the global petrochemicals output by 2020, Kharbash said.

The oil exporting region has been investing excess revenue from crude sales at prices that have hit three-digit levels in building and expanding petrochemical plants. (Reporting by Stanley Carvalho; editing by Elizabeth Fullerton)