Sabic: Migration of C2 capacity to Mideast to continue

26 September 2003 22:49 Source:ICIS News

HOUSTON (CNI)--Transformation of the global chemicals industry will continue with capacity migration to developing countries, and 50% of annual new global ethylene capacity will be added by Gulf countries alone by 2010, a top Sabic official said here Wednesday.

Abdullah Al-Dabibi, acting general manager of Sabic Americas, noted in remarks circulated here today that in the 16 years leading up to 2000, developing nations added one-third of the world's new ethylene capacity and more than 80% of all new methanol capacity.

"At the same time," Al-Dabibi said in remarks prepared for an industry conference here tomorrow, "higher cost facilities in more developed regions were being shut down." This, he said, is "a change, a real transformation."

That transformation will continue into the next decade, he said, and "the Middle East will be in an advantageous position to support and benefit from this migration" of productive capacity. He noted too that Saudi Arabia alone has more than one-quarter of the world's proven petroleum reserves and more than 100 years' worth of natural gas.

Despite its continuing oil-based income growth, he said Saudi Arabia faces a challenge to create additional economic growth sufficient to achieve a gross domestic product (GDP) growth rate high enough to offset the country's "substantially higher population growth rate, which has been averaging 3-4% for the last decade."

The need to keep GDP growth ahead of its population growth rate is driving Saudi government policy, he said, to open its economy to foreign direct investment and privatisation of state-owned enterprises.

He also said the Arab Gulf region is best suited to host the additional 5m tonne/year of ethylene capacity that likely will be needed to meet the demands of developing markets in Asia and on the Indian subcontinent in coming years.

Saudi Basic Industries Corp (Sabic) is headquartered in Riyadh, Saudi Arabia. Sabic Americas is based in Houston.

By Joe Kamalick