Jobs may be the key to resolve GCC oil dependency issue

Oil rates have dropped to $80 per barrel from around $100, which now raises the question whether these economies will be able to withstand the tests of time. Will these economies be able to flourish in an environment of fixed terms of trade?

This will depend on the condition in each nation. However, all the countries are bound by the need to increase generation of productive jobs and to improve skills and productivity of the workforces. Despite progress in economic diversification in some nations, this accomplishment will not be enough to offset the operational challenges. Dependency on the oil and gas sector has hardly changed in these countries.

Economic diversification may seem to be moving quickly, between 2007 and 2013 GCC non-oil GDP developed by 7 per cent per year, which surpasses the growth of a mere 2 per cent in the oil and gas sector. Nevertheless, the share of oil and gas sector in the GCC economies’ GDP has increased during the past 10 years, primarily because of the climbing oil prices in the period, which increased the minimal value of oil output.

Analysts believe that the diversification that has taken place is to sectors that rely on inexpensive hydrocarbon feedstock. GCC governments have formulated a plan to expand their economy away from oil and gas, which has boosted investment. The investment ratio of these nations has grown from 21 per cent of GDP in 2011 to around 24 per cent in 2014.

A number of projects are in the pipeline and these projects will account for nearly 155 per cent of 2013 GDP, with just Saudi Arabia planning on projects worth $1.1 trillion. But the other investments in infrastructure may not point directly to diversification or sustainable development.

The major hindrance to diversification lies in the lack of education, skills and jobs. The poor quality of education results in poor development of skills and a lack of innovation in the economy, and this can be seen in the number of patents registered that originate in the GCC. The effects of an unskilled population are also reflected in the little money that has been spent on research and development.

GCC nations can be regarded as the world’s weakest performers in primary as well as secondary school levels, accompanied by nations like Yemen and Ghana.

Thus, education continues to weaken the region and GCC’s plans of boosting investments into human resources should gain utmost importance. It seems like GCC members spend much more on infrastructure than any middle/high income nation, while expenditure on education is far less when compared to several other countries, excluding Saudi Arabia and the UAE.

This attitude towards education has led to reduced labour participation levels, especially among women. But when GCC girls surpass boys in global mathematical exams, then lower female participation levels cannot be explained by poor academic feats.

Labour force in GCC is growing by 3-4 per cent every year but the skills of the workforce remain underdeveloped, which makes higher employment rates and greater economic growth much more difficult to achieve.

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Is Mineral Oil really safe for you?

Mineral oil, a by-product of petroleum and an odorless, colorless substance, has become a much used ingredient of engine oils, wood preservative, facial creams, pesticides, hair care products, cosmetics and baby oil. Mineral oil is believed to relieve constipation, however recent studies show that constant use or exposure can prove detrimental.

Pregnant women who use mineral oil (orally) often can induce hypoprothrombinemia and hemorrhagic disease, which can lead to excessive bleeding in their new born babies. While, inhaling mineral oil by pregnant women can cause testicular cancer in the foetus.

The U.S. Department of Agriculture reported about a patient who had mineral oil injected into his lungs, leading to loss of vision, headaches, convulsions and brief coma.

Studies have shown that low quality or poorly refined mineral oil can lead to the development of skin and scrotal cancers after heavy exposure. Mineral oil has been classified as a carcinogen and tumorigenic by the U.S. Registry of Toxic Effects of Chemical

Mineral oil is often used to treat constipation and its side-effects are associated with the gastrointestinal tract. Continual use of mineral oil can cause the oil to enter the anal sphincter and the pruritus ani or affect the skin outside the rectum. It can also slow down healing of postoperative wounds in the anorectal region and disrupt normal defecatory

Those working in the petroleum industry are exposed to mineral oil mist in the air, which can induce coughing, wheezing, respiratory tract irritations, shortness of breath or tachypnea. Mineral oil is considered to even cause lipid pneumonitis. The oil may even move to the lower lobes of the lungs leading to cyst formations and fibrosis.

Mineral oil users can develop vitamin deficiencies. The oil covers the mucosa of the small intestine and decreases absorption of vitamins A, D, E and K. Lack of vitamin K can inhibit the ability of blood thinners to function properly, which may result in PT/INR levels in the blood to go beyond safe ranges.

Avoid using baby products with mineral oil as it can cause your child’s skin to become dry and irritated. Maybe it is time to switch to healthier and natural alternatives to mineral oil.

Replacing mineral oil with natural oils that are derived from foods is a safe alternative. Natural oils that can acts as great substitutes for mineral oil in hair and skin products include olive oil, almond oil, apricot kernel oil, rose hip seed oil, wheat germ oil, sunflower oil, jojoba oil, grape seed oil and coconut oil.

The makers often forget their responsibility of manufacturing products that are not detrimental to their clients’ health. However customers should never forget to read the ingredients label before making a purchase.

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Monetary growth is possible with the development of chemistry

Invention is not alone enough but it is an intoxicating combination of invention and innovation that can jointly make life better. Into the 17th century the development of chemistry gradually became the basis after a medieval chemical science and a speculative philosophy aspired on achieving a universal cure for disease and life solutions. However in the second half of 19th century, perceivable brunt of chemistry on humanity in the course of its smaller incremental novelty was being experienced. Nevertheless through application science, chemistry has been the force behind making miracles on a daily basis.

According to the researched report, in order to support new innovation most of chemical industries globally in the year 2013 had invested USD 56 billion in research and development, however around 1-2% total turnover on research and development (R&D) was spend by the Indian chemical sector. On the other hand, chemical industry has spent around 5-10% on research and development (R&D) in the developed countries.

Moreover by the year 2021, the market size of chemical is expected to rise globally at 4-5% per annum in order to reach USD 5.8 trillion and the absolute size of this industry hindmost by the fact that to almost all the other industries chemicals provides raw materials. Additionally around the end-consumer the processes are designed, however the focus on customer-centricity above just customer satisfaction is what set apart the chemical industry.

In spite of all types of challenges, the commercialization process of lesser incremental novelty in chemistry has begun to get noticed in India and the industries which are carrying out today is primarily linked with customer-centric and innovation encroachments like sustainability, affordability and efficiency.

As per the industry experts, marketing approaches which are not specific to brand needs to be adopted by the chemical industry, also from its antiquated approach to segmentation it needs to back off more dynamic type which is helpful to the customer and similar industry.

However chemistry became pervasive in a multi-disciplinary world and this science has been blending in with cutting-edge technology for decades and to continue improving our quality of life, chemistry has been providing the groundwork and driving innovation. Nevertheless, in the midst of consolidation phase and restructuring the chemical industry stands firm these days, besides rising tie-ups of industry and academia is also needed.

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Renewable energy may be the way out of economic quagmire for Egypt

Lack of abundant financial resources combined with the failure to form strategic plans is responsible for Egypt’s energy crisis.  Mohamed Shoeb, former president of the Egyptian Natural Gas Holding Company, said, "The energy problem is well known. Its solutions are also well known, but there is no will to solve it."

Experts suggested that the government should come up with innovative solutions. Solar energy is considered to be a viable and beneficial option for Egypt. Nations like Germany have formulated a plan to produce electricity from renewable energy by 2050. Solar energy has become extremely inexpensive; the cost of it has decreased by 90 per cent in the past 10 years.

Experts opined that smart electricity meters can bring down consumption in peak hours and thereby reduce electricity cuts. Power cuts have become frequent since 2008, but the cuts were limited to summer months. However, in the winter of 2012-12 blackouts became common.

The government can lower consumption of households that make use of several air conditioners or other power-hungry electronic devices.

Households can also increase use of energy saving LED light bulbs, which will reduce consumption by almost 20 per cent. "There are several ideas that can be studied and implemented, but we have been very slow," says Mohamed Moussa Omran, undersecretary of the Ministry of Electricity.

Despite being the first region to start use of solar energy, they were left behind by countries like Bahrain, UAE and Saudi Arabia, which have started use of smart meters. "Transparency is missing, and that is a problem that needs to be solved. The government thinks the people are not capable of understanding the problem," says Shoeb.

Egypt expects to use nearly 2,500 megawatts yearly for the next five years in order to meet the rising demand, at a cost of $2.5 billion per annum. Egypt would also require funds to set up power stations, and fuel needs would cost at least $700 million per station per year. Foreign investors are crucial to the process of developing power stations as well as the power grid.

Nearly 80 per cent of Egypt’s electricity needs are met with the help of natural gas, the production of which has declined tremendously in recent years as a result of political instability and rising government debts have made foreign energy companies hesitant to invest in development of new gas fields. 

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Major expansion of Petrochemical industry is scheduled in Qatar

Qatar which is one of the richest state per-capita in the world and as per the year 2012 the country has established nearly 15 billion barrels of oil reserves and around more than 5% of gas fields of the global resource. In terms of its petrochemicalindustry, Qatar is at second position in the midst of Gulf Co-operation Council (GCC) countries. Moreover for the country the petrochemical industry is a key source of hard earning which ranks behind the crude oil and the liquefied natural gas (LNG) sectors.

According to the industry experts, over next 5-10 years the country has a greater petrochemical expansion plans than any other country in the region and the expansion of the petrochemical industry will bring in growing revenue and produce numerous new jobs in the coming years.

According to the industry experts, in the petrochemical industries the country is taking good steps to prolong their success and with this it is taking action against the potential threats from the international souk. Moreover at the same time from low cost shale gas as a feedstock, most of the US manufacturers are gaining benefits as these will make the US the cheapest place in the world to produce petrochemicals.

In the coming years the US tactics to spend around USD 100 billion in the petrochemical facilities and it much prone to flow into the Asian market once the product starts to come on-stream by setting it in an unswerving competition with the product from the Middle East.

According to the sources, the current production of petrochemicals in the small nation state intends to boost surplus twice in order to reinforce its traction in the industry. Moreover in the Gulf region the construction of the two largest petrochemical projects is at present on track and due to the high outlay of these projects the government remains the largest shareholder in petrochemical investments.

In past few years the petrochemical industries in Qatar have seen a noteworthy rise and most of the Petchem companies based in this country have a few really big decisions in front of them as they are facing the choice of defending their markets in Asia against the low cost US product in the midst of a budding impact on price and margin.

Furthermore for the development and expansion of the chemical and the domestic petrochemical industries, the country plans to invest around USD 25 billion and in the year 2012 major petrochemical manufacturers Shell oil companies and the Qatar Petroleum had affirmed the plan to build up an olefins project in Ras Laffan Industrial City at a total outlay of USD 6.4 billion.

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World fears an oil crisis

The political tensions in oil-producing nations, especially in Iraq and Libya, have sparked fear of oil shortage. The global market is worried that oil supply from Iraq may stop at any moment, which will lead to a huge rise in oil prices. If supply from Iraq halts then oil prices will easily reach $130 per barrel.

The suspension of production will equal 3.3 million bpd of Iranian oil supplies and 1 million bpd of Libyan supplies, including weak oil exports from Syria, Egypt and Yemen. Thus, the shortage of oil hit 5.4 million bpd, equivalent to the total oil surplus capacity of the OPEC countries.

 

The demand for oil at present is at its peak, specially in Gulf oil-producing nations where consumption has reached 10 million bpd. Consumption also increased in Iraq, Egypt, Iran and Indonesia.

Majority of the oil dependent nations rely on the rise in Iraq's crude oil production to over 8 million bpd by 2018.

These facts explain the state of fear experienced by oil-producing and oil-dependent nations, especially considering the decision of international oil firms operating in Iraqi oil fields to withdraw their workers. This will lead to a delay in the rise of crude oil production and also cause a surge in oil prices.

The US shale gas revolution as well as the easing of sanctions on Iranian oil exports have prevented tremendous increase in oil prices. These two factors will continue to prevent a rise in oil prices if Iraqi exports are suspended, however the world will lose a major source of cheap energy.

Losing the largest and most important source of oil will put more pressure on oil-producing nations to maintain a steady supply of oil. However, this pressure will arise from consuming countries other than the United States, as they will continue to invest in shale as long as the price per barrel is over $90-$100.

The rise in oil prices will be inevitable if crude oil supplies from Iraq to the outside world are suspended. The need of the hour is to conduct more research and exploration of new oil field and wells

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Fracking Link has shoddily impact the health of infants

The word ‘fracking’ which is also known as hydraulic fracturing is a well intrusion performed on an oil or gas well, in order to increase the production by improving the flow of hydrocarbons from the drainage area into the well bore. As an allegedly bio-hazardous industry fracking has already attracted controversy, as the early researches have marked that this practice has increase the risk of infant birth defects living near the fracking sites.

Over past few decades in the U.S., the use of fracking a method to extract gas through which chemicals, water and sand are pumped into the ground to discharge trapped fuel deposits has been increased significantly and about 5 years ago the country had produce oil for around 5 million per day and today it produces 7.4 million due to fracking.

According to the research conducted in the month of January 2014 by Lisa McKenzie of the Colorado School of Public Health had discovered that number of congenital heart defects in the infants born to mothers living close to gas wells in Colorado.

Furthermore, two more studies that have not been looked closely shows that in the Pennsylvania, United States new born babies born close to fracking sites were more prone to have low birth weight, which is a sign of developmental problems. Moreover local authorities in Utah which is one of the states of United States are examining a rise in stillbirths after tests, where they found hazardous levels of air pollution from the oil and gas industry.

However, with the rising fracking wells that were also examined by few researchers were resulted in the incidence of neurological defects despite the fact that it was only at high levels of exposure, also premature birth, low birth weight and oral clefts were scrutinize by the researchers for a correlation.

One of the studies that was conducted in Colorado where fracking in five cities of Colorado were banned or drilling within municipal boundaries were also sought long-term moratorium after wells popped up near schools and backyards and industry were also pushed back.

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Iranian government announces new economic policy package

The Iranian government recently announced its new economic policy package to help the country emerge from stagflation. This policy is focused on expanding domestic demand, resolving financial shortages and obstacles faced by the country as a result of the western sanctions.

The government is also looking to improve Iran's economic efficiency, especially considering the access to limited resources.

The government plans to boost the economy through a number of financial and foreign exchange policies, and at the same time improved ease of doing business will also help develop the economy.

The new economic policy will help stimulate economic growth through channeling economic resources towards the most efficient economic sectors in order to boost exports and reduce dependence on oil revenues. It focuses on four main areas-

• Macroeconomic policies

• Policies on ease of doing business

• Financial policies

• Economic stimulants

The government has been working toward reducing the rising inflation through monetary regulation and macroeconomic stability. The new policy has helped the government reduce inflation over the past 12 months from 37.5% to 27.7%.

The dual currency exchange system has impacted the economy, which the government hopes to resolve by stabilizing the currency exchange regime and bring down costs in the manufacturing sector.

The government hopes that stable currency and predictable inflation could lay the foundation  for macroeconomic stability.

The new economic policy will focus on eliminating dual currency exchange regime, lowering currency exchange regulations and improve the flow of foreign investment.

Financial restrictions by the banks in their lending to the manufacturing sector has also affected growth, primarily becuase of the increasing government debt.

The repayment of debt could help boost credit expansion and domestic production.

The government is planning to improve ease of doing business through less intervention in the market in terms of pricing goods and services. SMEs have had restricted access to financial resources and bank credits. Thus the banking and credit policy included in the new policy will help regulate the banking sector.

Non-oil exports will help improve domestic demand and reduce dependence on oil revenues and diversify the country's financial resources.

The oil, gas and petrochemical sectors hold a crucial position in the Iranian economy. Backward and forward linkages with several sectors across the economy could help boost production and growth.

This new policy will put emphasis on boosting energy production and consumption efficiency. The Iranian government has adopted the following policies-

• Investment in roads and public transport, introduction of 17,000 buses and 37,000 taxis across the country

• Improving the efficiency of the national railways

• Increasing the country’s gas exports

• Producing 700,000 barrels of crude oil per day from West Karoun oilfield

• Boosting petrochemical exports from $9.9 billion currently to $12.2 billion in 2014-15

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Middle Eastern oil prices to rise

Growth of OPEC and non-OPEC oil supply is expected to decline within the next 18 months and the average Brent prices for 2014 and 2015 are likely to range from $106-$109 and$103-$108, respectively.

A recent report suggested that Brent prices may increase on the back of tighter supplies. Most research groups were expecting oil prices to decline as a result of strong dollar, slow GDP growth and increasing supplies.

However, Brent crude oil front-month contract rolling prices have average $109/bbl and a number of reasons have been responsible for these high rates. Geopolitical crises and supply issues coupled with depreciation of the dollar by 2 per cent and the rising US inflation have pushed up oil prices.

Non-Opec supply accounted for nearly 4 quarters of the 2 million bpd supply growth on a year-on-year basis, but is currently growing by only a million bpd year-on-year, which will lead to limited supply. Majority of the growth is expected to come from North America and nations like China, Brazil, Russia and Columbia will enjoy only limited gains. Thus, a number of key producers will likely face declines.

WTI is expected to fall below $100/bbl in 2014, while US benchmarks will see downside risks. The WTI crude oil forecast for 2014 and 2015has now been revised to $98/bbl and $96/bbl, respectively.

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Variety of economic policies indicated by the proposals of Union Budget 2014-15

The Indian finance minister Arun Jaitley on 10th July, 2014 had presented the Union Budget 2014-15 in the midst of high expectation from the middle class and industries. According to the market players, across the political spectrum the reaction towards the Union Budget for 2014-15 have been fairly predictable and for most of the chemical industry such as pharma and fertiliser industry were quite disappointing for most of the chemical industries. However the Indian finance minister Arun Jaitley have come up with few comprehensive ideas such emphasis on renewable energy and agriculture, improving the infrastructure by making better ports, roads and rail linkages.

Furthermore talking about curtail on custom duty in the budget proposals, there was diminutive to an unambiguously show for the chemical industry. Basic Customs Duty on a few basic petrochemicals such as ethylene, propylene, butadiene and o-xylene (OX) has been cutback from 7.5% to 5% and 10% to 5% on crude naphthalene. With the decreased in the Basic Customs Duty, producers of naphthalene which produces dye intermediates as well as of naphthalene formaldehyde sulphoxylates which are basically used in the construction industry as a concrete admixture will merriment cheaper imports of crude naphthalene.

Moreover the budget proposals have seen few segments in paints and coating industry, pharmaceuticals industry and fertiliser industry. The coating industry directly and indirectly might be a recipient of the proposals and demand for paints might be certainly collision due to higher tax immunity and incentives for savings which may perhaps abscond more money in the pockets of consumers.

For the pharmaceuticals industry the Union Budget 2014-15 has no specific proposals and have only focused on one part of the segment – health care. The finance minister looks forward to concentrate of healthcare segments by setting up four AIIMS in different parts of the country and number of government medical colleges and also improving public infrastructure that will boast optimistic impacts. Moreover to reinforce the States Drug Regulatory and Food Regulatory systems the Central Government for the first time will provide central assistance by creating new drug testing laboratories and will also make the 31 existing state laboratories stronger. However the Union budget 2014-15 of 2014 for pharma sector is quite growth-oriented, balanced and a realistic budget.

 

This year the Union Budget 2014-15 for the fertiliser industry is to focus to frame a new urea policy and on the fertilizer business the overhaul subsidy regime will have a positive impact. Furthermore the finance minister had declared the conception of an Agriculture Infrastructure Fund of Rs. 100 crore to shore up research and development, in order to give an impetus to investment in agriculture and make the farming more competitive. According to the sources the Finance Minister had further added that the corrosion of the soils was in turn resulted due to concerns regarding inequity in the utilisation of different types of fertilisers that were mounting high. However, according to the researched report the reform for the chemical industry is vital with its long value chains.

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