Most global chemical demand growth is projected in Asia, so companies like Aramco, ADNOC, and PIC have been concentrating their efforts on penetration into the Asian chemical markets, mostly associated with refinery complexes. While GCC majors could build oil-to-chemicals complexes domestically and export the chemicals to Asia—there are a few oil-to-chemicals projects under consideration in the GCC— these are costly investments, and limited local demand means it is difficult to reach sufficient scale to justify investment. Hence, these projects need to ensure competitive export economics if they intend to largely cater to export markets.

GCC export-oriented petrochemical projects have poor economics when cracking feeds with a high naphtha or LPG component. The cost of exporting numerous chemical streams from the GCC is more expensive than exporting bulk oil products, in addition to the typically higher cost of building large-scale chemical operations in the region compared with the highly competitive environment in mainland China and other Asian regions.

Thus, GCC oil majors have sought less cost-intensive alternatives that would still allow them to expand their chemical sector presence in the region with most demand growth: Asia. In partnering with Asian market participants to gain a stake in Asian assets, GCC oil majors have secured long-term oil and petrochemical feedstock offtakers.

For Asian refinery-to-chemical owners, the underlying strategy for partnering with GCC oil majors is long-term energy security and chemical feedstock supply but also to gain access to crucial technology. GCC companies are developing processes that could significantly increase refinery transformation yields (currently at 8–12% of the barrel): Aramco is aiming to raise refinery output to 70–80% of added-value petrochemicals.

Some mainland Chinese market participants are extending these GCC partnerships into upstream asset stakes and oil-to-chemicals and/or cracker projects in the GCC. This is partly because the GCC is a US dollar area—businesses established here are not exposed to renminbi fluctuations—and has been rather protected from trade barriers so far. Because of this, it is advantageous for mainland Chinese companies to secure a foothold in this region, which they can export from, while also allowing mainland Chinese engineering and construction companies to grow their global footprint.

Notably, investments in mainland China, where most GCC–mainland China partnerships are focused, must be approved by the Chinese national government, regardless of whether companies are private or state-owned. Aramco, ADNOC, and PIC are also state-owned, so the GCC–mainland China petrochemical partnerships have strong government backing, highlighting the geopolitical strategy involved in the deals.

The GCC has also been seeking stronger trade and investment alliances with multiple countries. The world is becoming increasingly polarized, and there is a perceived loss of US interest in the GCC. This is shifting GCC foreign policy toward regionalism and multi-alignment as its members try to expand economic and security ties beyond the US and mainland China.

Asia is at the center of GCC efforts to diversify its trade strategy. Over the past two decades, total GCC–Asia bilateral trade value grew more than fourfold for GCC exports and sixfold for Asian exports, with a similar trend for chemical trade, according to GPCA. By using free trade agreements, securing a seat in emerging prominent international blocs, and joining inter-regional infrastructure projects such as IMEC, GCC countries are taking significant strides to gain a critical position in global supply chains, connecting the East and the West.

At the second ASEAN–GCC summit, in May 2025, the first involving mainland China, the three parties agreed to start negotiating a free trade agreement due to concerns about US tariffs, rising trade tensions, and the global trade system’s integrity, marking a shift in regional geopolitics. Within the GCC, the UAE has been particularly active in bilateral free trade agreements, having signed multiple CEPAs in recent years, including with India, Indonesia, Cambodia, South Korea, Vietnam, Australia, Malaysia, New Zealand. It also joined the international bloc BRICS, which is opening pathways for multilateralism and establishing institutions that could challenge the G7 or the World Bank.

While most GCC petrochemical investments into Asia have focused on Northeast Asian countries so far, the focus is shifting toward capturing growth in Southeast Asia and India. India is currently the second-largest GCC trade partner and likely the next GCC partnership and foreign investment target. Geopolitics are also playing an increasingly important role in investment flows and preferential access to strategic markets. Thus, UAE CEPAs with India and multiple Southeast Asian countries along with the ASEAN–GCC FTA currently under negotiation also make these markets likely choices for the next round of investment.