InterviewSaudi Arabia develops downstream

13 December 2007 11:03  [Source: ICIS news]

By Jeanne Lim

DUBAI (ICIS news)--Saudi Arabia currently produces around 12 downstream petrochemicals but hopes to see this number grow to 70-80 in three-to-four years, a senior industry official said on Thursday.

Currently, about 10% of Saudi Arabia's petrochemical revenues come from downstream materials, with basic chemicals forming the bulk.

"This is unacceptable," said Abdulrahman al-Zamil, chairman of Saudi industrial conglomerate Zamil Group, which owns Saudi International Petrochemical Co (Sipchem) and Sahara Petrochemical.

The 40-year industry veteran was speaking to ICIS news on the sidelines of the three-day 2nd Gulf Petrochemical and Chemical Association (GPCA) Conference which ends on Thursday.

In comparison, countries like Germany has 56% of its petrochemicals revenue come from high-value products while the UK has 51%, he said, adding that India and China receive 44% and 35% of petrochemical revenue respectively from downstream material.

"Saudi Arabia has been producing basic products from gas for the last 30 years. That has to change," he said.

As a result, the Saudi government has now made petrochemical projects high on its agenda and is making new developers commit to downstream projects when it allocates the kingdom's gas resources, said Al-Zamil.

For instance, as part of the agreement, winners of the gas bids must encourage private sector companies to establish downstream projects, he said.

"These can be in the form of providing better pricing for raw materials and providing better locations [for plants], and help in the marketing of these products," he said.

The government has shown its commitment by building new industrials cities such as Jubail 2, Jubail 3 and Jubail 4, he added.

The private sector has so far invested Saudi riyals (SR) 400bn ($107bn) and the government investment arm the Royal Commission for Jubail and Yanbu has contributed SR85bn on cultivating the petrochemical sector, said Al-Zamil.

"This is expanding everyday," he said.

($1 = SR3.73)

By: Jeanne Lim
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