Dubai: Saudi Arabia's petrochemical industry will have attracted $150 billion (Dh551 billion) in total cumulative investments by 2016 as the sector is witnessing a "golden era" of growth, but more needs to be done to develop conversion industries that can create jobs for the local population, an adviser to the country's petroleum and minerals ministry said yesterday.
"Looking at the Saudi petrochemicals industry today I am pleased to say we are living in a golden era," Prince Faisal Bin Turki said at the Gulf Petrochemicals and Chemicals Association forum in Dubai.
"We are witnessing the largest growth in its [the industry's] history with total production of petrochemicals, chemicals and polymers expected to be over 100 million tonnes by 2016 — a 250 per cent growth from 2006 levels."
Saudi Arabia, the Arab world's biggest economy, will see annual production of methylene and propylene jump 230 per cent and 300 per cent respectively versus 2006 levels, he added.
The petrochemicals industry has emerged as a key sector in the Gulf amid plans by countries like Oman, Kuwait and Saudi Arabia to diversify their economies away from oil and to create jobs for their young and growing populations.
Investors
Local and international companies such as Saudi Basic Industries Corp (Sabic), Chevron Phillips Chemical Co and Dow Chemical Co are investing in petrochemicals in the Arabian Gulf region due to the wide availability of cheap natural gas, commonly used to make plastics.
The availability of gas has given the region a competitive edge over petrochemical industries in Europe and the US, which are largely based on naphtha, a crude oil derivative that has become more expensive as oil prices have risen.
Prince Faisal said the ministry had been working with the industry on expanding the kingdom's product portfolio and moving along the value chain to include 120 new petrochemical and chemical products that will enable the creation of future downstream conversion industries as part of a kingdom-wide strategy to diversify its economy.
However, the prince warned that Saudi Arabia would lose out on the opportunity to generate more jobs if didn't create more conversion industries at home.
Exported, shipped back
"Most of these petrochemicals and specifically over 85 per cent of the polymers made by the Saudi industry are exported and then shipped back to the region and other world consumers in the form of finished goods with the associated jobs being created elsewhere," he said.
"This is a substantial lost opportunity for Saudi Arabia to meet the growing demands of markets in the region while creating jobs within the conversion industries in Saudi."
A new local initiative, the National Industrial Clusters Development Programme, was developed to drive efforts to encourage completing the value-added potential of local resources, the prince added.
