Refining and Petrochemicals in the Arab-European Dialogue


The Refining and Petrochemical Group of the Arab-European Dialogue is expected to convene at the month’s end amid discord not only between the two sides but within each. For their part, the countries of the European Economic Community disagree among themselves on the desirability of raising refining capacity and on the possibility of imposing restrictions on the entry of some refined or petrochemical products. The nature and magnitude of disagreement on the Arab side is, however, the more critical. Clear vision is wanting on decisions regarding the upper limit of production of refined or petrochemical products and on a future marketing policy.


If the Arab side is to speak with one voice and present its objectives in a specific manner, a certain degree of cooperation is needed. As it is, the countries of Western Europe have an edge over the Arab countries in that they control 35% of world refining capacity. The Arabs, with their mere 3% share, will certainly find their position much weaker if they are unable to come to agreement.


The European side claims that a surplus in world refining capacity will result following the completion of new refineries in the Arab region. But, in fact, projections on demand for refined products are so marked by differences that it is hardly possible to tell if an extra five million barrels a day of refined products would constitute a surplus.
Based on the varying rates of economic growth, the OECD countries would by 1985 import a daily total of 32 to 39 million barrels of oil.


The processing of raw materials by the developing countries, including the oil-producing countries, stems from its importance as a first step toward increasing the share of these countries in the world’s output of industrial products. Because of its importance, this fact must not be overlooked. Furthermore, the establishment of refining and petrochemical industries in the oil-producing countries would be economically advantageous in the long run, because given the proper conditions, production can be sustained over a longer period than is possible in other regions of the world.