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Saudi Arabian petrochemicals

Hydrocarbon Engineering,

According to BMI, Saudi Arabia’s petrochemicals sector is going to continue to play a central role in the development of the country’s non-oil industrial sector, helping to balance the ongoing decline in oil production. Yet, the export oriented sector is vulnerable to the external market and this is a situation that is being made worse by an overwhelming focus on basic chemicals which is beginning to erode margins as Asian demand growth weakens.

Petrochemicals capacity

The country’s industry is not expected to see a massive rise in overall petrochemicals capacities until 2016 when the Sadara Petrochemicals complex is due to come online. The plant will have an ethylene capacity of 1.5 million tpa. This year, the most notable development will be Arabian Industrial Fibre Company’s 420 000 tpa polyethylene terephthalate (PET) plant. Alrajhi Group’s new complex is also due to come online this year, which will include 100 000 tpa of linear alkyl benzene (LAB) and 6000 tpa of polysilicon.

The above should boost supplies to downstream plants in the Kingdom as well as external markets. Consumption growth of PET is led by Asian emerging markets as it is used in the production of plastic bottles and polyester fibres. LAB is being invested in heavily in the Arabian Gulf.

Access to feedstock

Access to a high level of cheap feedstock is likely to alter in Saudi Arabia as the government embarks on a phased increase in the price of gas sold to domestic industrial users, in addition to reducing the discount that is currently applied to propane prices. By the end of Q1 2014, severe feedstock shortages are expected, a time when Saudi production will be in competition with petrochemicals produced from cheap US shale gas. However, it is thought that the country will remain a leading petrochemicals exporter, and as long as the Asian market continues on the expected trend, will help absorb the surge in petrochemicals and plastics. 

Adapted from a press release by Claira Lloyd.

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