Saudi petrochemical projects worth US$63 billion - NCB

Saudi_projects

According to a new report by National Commercial Bank (NCB), Saudi Arabia has 62 petrochemicals projects valued at around US$63 billion and is set to produce 32 per cent more petrochemicals by 2015.

Nearly 21 per cent of the value of the 62 projects is in the execution stage while 33 per cent is in the study phase and 18 per cent is in the bidding stage, the NCB report said.

"The value and volume of forecast petrochemical contract awards are significantly higher in 2012 than in previous years, at US$33.06 billion and 23 projects. These capacity additions will become operational from 2015 onwards."

The study said the Saudi petrochemical sector would continue to hold a considerable global market share of product categories that lie not too far downstream of its pronounced feedstock advantage.

The report said that at this point, distribution channels will become imperative, adding that although the Kingdom possesses feedstock, utilities and a strong infrastructure, it does not have access to markets of specialised products.

Ethane-based products

The scarcity of ethane, the primary feedstock in the country, is the "most important challenge of the sector," according to the report. It noted that Saudi Aramco has allocated the totality of its ethane reserves and is currently making concerted efforts to bring more gas online.

Furthermore, the additional labour costs and expensive maintenance of naphtha-fed crackers make the rate of return on its products lower than those of ethane-based products, according to the study. The report said the recent surge in petrochemical prices and subsequent growth of domestic producers' profits will offset the higher cost of naphtha in the short term.

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