Saudi Arabia continues to be GCC’s largest petrochemical producer with an annual 244mn cu/m of capacity, a report from National Commercial Bank reveals
The expansion in ethylene production capacity has resulted in Saudi Arabia being the third largest producer worldwide, accounting for 11 per cent of global ethylene capacity, the report by economics department research team added.
The Saudi Arabian petrochemicals industry is, however, not expected to see a massive rise in overall petrochemicals capacities the Sadara petrochemicals complex is due to come on-stream in 2016.
The researchers stressed that the petrochemical sector in the Kingdom remains well-positioned regionally and is driven globally by a positive demand outlook.
But they also said that the recent discovery of North American shale gas and oil is likely to have an effect on the Kingdom’s petrochemical sector in its trajectory toward remaining upstream or moving downstream.
Ethylene is a key building block in the petrochemical industry. In recent years, the world has witnessed its largest ethylene capacity expansion, growing at a compound annual growth rate (CAGR) of four per cent between 2007 and 2012, to reach 55mn cu/m in 2012. But the GCC capacity addition in the same year trended downwards by 13 per cent.
The majority of capacity additions within the GCC between 2007 and 2012 took place in Saudi Arabia, which accounted for 64 per cent of the regional capacity additions.
With 49.5mn cu/m per year, Saudi Arabia was the largest ethylene producer in the region, accounting for 72 per cent of the regional ethylene capacity in 2012.
The petrochemical sector in the country is characterised by three main factors. Firstly, the Kingdom has substantial proven feedstock reserves, with 264bn barrels of crude oil, 7.9 trillion cu/m of natural gas and an estimated 16.9 trillion cu/m of unconventional shale gas.
Secondly, low feedstock and energy costs have, to-date, have led to a comparative and a competitive advantage for petrochemical producers.
Lastly, the Kingdom has strong industrial and regulatory infrastructure, which have been integrated into specially developed industrial cities.
The majority of Saudi Arabia’s non-oil exports consists of petrochemicals, which include downstream plastic production and building materials.
