Saudi Arabia’s petrochemicals projects market has had a robust 12 months with $11.8bn worth of projects in the sector during 2012, according to the Middle East projects tracker MEED Projects.
The figure is a 14 per cent increase on the 2011 figure of $10.3bn and reflects the massive capital expenditure the kingdom is making to lengthen its hydrocarbons value chain.
A number of large-scale petrochemicals projects were awarded in 2012 on both coasts of the kingdom.
At Jubail in the Eastern Province the final engineering, procurement and construction (EPC) packages on the Sadara Chemical Company’s $20bn complex were awarded in the first six months of last year.
The complex is owned by Saudi Aramco and the US’ Dow Chemicals and will be the largest facility of its type ever constructed in one phase.
Also in Jubail the Saudi Basic Industries Corporation (Sabic) and the US’ ExxonMobil Chemical awarded EPC projects to three contractors for the $3.4bn Elastomers joint venture project.
Across on the west coast Saudi Aramco and Japan’s Sumitomo Chemicals finally awarded contracts for the PetroRabigh phase II expansion with deals worth over $5bn.
The petrochemicals industry has been earmarked by Riyadh to be the most important industrial sector in Saudi Arabia, with many smaller conversion industries expected to be created that will use the offtake from Aramco and Sabic’s megaprojects.
Other key sectors such as automotive, electrical good manufacturing and plastics and packaging will benefit directly from the diverse mix of intermediate chemicals that will be produced by the majority of the megaprojects initiated in 2011 and 2012.
However, with well over $20bn invested over the last two years the run of project activity cannot be sustained and this is reflected in the 2013 forecast.
According to MEED Projects only $3bn worth of petrochemicals schemes are at the design, engineering or tender phases in Saudi Arabia. If all of these are awarded during 2013 that will signify a 75 per cent drop on the 2012 figure.
The low figure reflects the cyclical nature of the kingdom’s various hydrocarbons sectors with increased activity expected in upstream gas projects.
The short term outlook may look worrying, but the mid-term outlook does offer some hope for contractors. MEED Projects states that there are an estimated $14bn worth of petrochemicals projects at the study phase.
This figure is an estimate and will likely become lower if the schemes become realised and move into the front-end engineering (feed) phase.
Khalid al-Falih, the chief executive officer of Saudi Aramco, said in 2010 that the GCC’s chemicals industry was entering a “golden age” that would see it rival the rest of the world in terms of production and diversity of products.
The last two years in the kingdom has seen the start of the realisation of this statement and even though a relatively quiet 12 months is likely, Saudi Arabia is still leading from the front as the region’s most ambitious petrochemicals producer.