The continuing poor outlook for world oil prices and the global financial disarray of recent weeks have concentrated minds in many countries, not least Saudi Arabia. Despite the doom and gloom in emerging markets the outcome could be a positive one for the Kingdom in the medium-term, bankers and analysts say.
Policies aimed at adding value to the country's crude oil resources and promoting non-oil exports may now be accelerated, along with efforts to allow the private sector a greater role in industry, utilities and services. While the debate about Saudi Arabia's opening to the global economy is intensifying, the maturity and long experience of some of its key merchant families and corporate players is likely to provide a solid basis for expansion both at home and abroad within the next few years.
ADDING VALUE TO OIL EXPORTS
The fall in crude oil export volumes, as well as in prices, is "putting major pressure" on Gulf producers "to add value," comments Angus Blair, head of emerging markets for the Middle East at ABN AMRO in London. "This will have to be addressed sooner rather than later."
The Saudi Arabian Basic Industries Corporation (Sabic), which is 30 per cent privately owned, is leading the way with major expansion projects to produce methanol, the fuel additive methyl tertiary, butyl ether (MTBE), ethylene, aromatics, thermoplastic resins, intermediate chemical products and fertilisers, steel and industrial gases. By the year 2000 Sabic and its affiliates expect to produce more than 30 million metric tons of products, compared to 23.7 million tons last year, company officials said in July.
Sabic's largest petrochemical complex, the Saudi Petrochemicals Complex (Sadaf), has already been enlarged to produce more than one million tons of ethylene -- a basic feedstock for the production of plastics, 840,000 tons of ethylene dichloride and 670,000 tons of caustic soda a year, in addition to its output of ethanol, which amounts to some 300,000 tons annually. The complex, which is a joint venture with the Shell Oil subsidiary, Pecten Arabian Company, will now benefit from a new MTBE plant as well, which will be capable of producing some 700,000 tons a year.
Together with another wholly-owned Sabic affiliate, Petrokemya, Sadaf is setting up a new plant to produce 500,000 tons of styrene a year, boosting Sadaf's total styrene output to 950,000 tons annually.
The Saudi Yanbu Petrochemical Company (Yanpet), a joint venture between Sabic and Mobil of the US, is doubling the capacity of its olefins operations at its complex at Yanbu Industrial City in the Kingdom's western province. The project includes adding an ethylene cracker to produce 250,000 tons of propylene and 116,000 tons of pyrolysis gasoline a...