Saudi Arabia to Move Further Downstream in 2011



photo : zawya.com

According to the excellent MEED, Saudi Arabia is set to further expand its downstream petrochemicals industry in 2011 with more than $20BN of new investments. With high unemployment rates and a growing young population, the government has recognised the need to provide extra jobs for the local population.

As we move down the petchems chain, many more jobs are created, particularly if consumer goods are produced locally. The country already has a solid cracker and polymers industry with SABIC and Saudi Aramco the major players. Saudi Arabia  is not alone in this thinking, with the development of the ADBIC polymer park in Abu Dhabi.

Although plastics consumption per capita is relatively high in the region, the markets are fairly small in terms of population. So to attract international companies and bring in the knowledge and expertise, attractive investment conditions will be required.

However, where there is a will, there is a way. The fact that the Saudi Government recognises the overwhelming need to create employment, means that things will certainly happen. Watch this space!

Middle East Petchems Production Capacity Soars

photo : arabianoliandgas.com

The Gulf Petrochemicals and Chemicals Association (GPCA) has published a recent report outlining recent investment in the region.

By 2015, the Gulf region will be supplying a fifth of the world's petchems output or 155 million tonnes per annum.

Saudi Arabia remains the region's biggest producer, with some 50% of the above output.

Interestingly much of the new investment results from a political, rather than economic agenda, with governments keen to maximise employment. The logical next step from this is to also move into plastics processing. We can expect to see more polymer parks along the lines of the one being devloped by ADBIC in Abu Dhabi. However the challenge for these parks is attracting investment from industry players. The incentives are good but the parks are relatively remote from the consumer markets.

The end result is uncertain but the region has certainly become a powerful player in petchems, given feedstock availability and the political will to develop employment via petchems manufacturing. With global demand unlikely to absord all of the new capacity, there will have to be rationalisation projects elsewhere.

World's Largest Polymer Park Changing Face of Plastics Conversion

photo: Arabianoilandgas.com

With up to 15 million tonnes of new polymer capacity coming on stream in the GCC region from highly integrated and effficient plants, the obvious next step was to improve the integration of these plants with the downstream convertors. The new Abu Dhabi Polymers Park is a huge step in achieving that goal.

The park, developed by the Abu Dhabi Basic Industries Corporation (ADBIC), a state owned organisation, will cost some €3.5 billion to complete and once fully operational, will consume up to 2 million tonnes per year of polymers (mostly PE, PP, PVC and Polyester).

The park's developers have given considerable thought to the design of the cluster and have come up with a very well structured package. The park will have purpose designed logistics facilities, a nearby deep-sea container port, flexible supply chain and technical service capabilities and competitively priced utility and land costs. Unlike existing clusters, the concept has been carefully designed from the outset, rather than evolving out of large corporate supersites, as was the case with many of the European clusters.

So with leveraged procurement, high quality logistics, on-site technical support capability and competitive land and utility costs, it sounds pretty good. Add to that a growing local market and zero tax on company and private income and you have an irresistible opportunity.