News focus: Saudi petrochemical players seek gas price dialogue

29 November 2013 09:35 Source:ICIS Chemical Business

Saudi petrochemical industries are urging the local authority to communicate with local industry stakeholders, academics and consultants as part of a consultative process for determining the country’s future gas price policy, a senior executive of NATPET said.

Industry stakeholders in particular should have a role in the change process because the Saudi government’s plans to raise domestic propane prices will have a direct impact on local industries, he said.

“We still believe that raising feedstock prices in Saudi Arabia will have serious implications for the local industries,” said Jamal Malaikah, president and chief operating officer of National Petrochemical Industrial Co (NATPET).

He spoke to ICIS at the sidelines of the 8th annual Gulf Petrochemicals and Chemicals (GPCA) Forum in Dubai.

The Saudi authority should not raise gas feedstock prices in Saudi Arabia on the assumption that US gas prices will rise in the future on increased domestic and global demand, said Malaikah. Higher ethane and propane gas prices in Saudi Arabia will deter foreign investment and drive investors to the US, he said.

“Shale gas is a game changer. If US producers enjoy lower-cost propane, they will export lots of polyethylene [PE] and polypropylene [PP] to Asia and the Middle East,” Malaikah added.

There is an urgency for Saudi Arabia to maintain its feedstock advantage, particularly with the recent rise of protectionism in global trades where countries or regions impose or raise import tariffs, he said.

By Chow Bee Lin