Saudi downstream picks up speed

17 May 2011

Saudi Arabia is aiming to become a global petrochemicals player as Riyadh shifts focus to provide feedstock and materials for automotive and electronics sectors

Saudi Arabia has been planning to expand its petrochemicals industry for some time and 2011 is looking like the year that projects really start to accelerate.

More than $20bn-worth of projects are currently being tendered and more are on the way.

The move downstream is now firmly under way. Many of the planned projects are geared towards providing the raw materials for industries, such as automotive, consumer goods manufacturing and solar power.

With 11 per cent of Saudi males unemployed and 47 per cent of the population under 18 out of work, job creation is a top priority for the government. This demographic time bomb is ticking and Riyadh knows that it has to act quickly if young Saudi Arabians graduating from college and university over the next decade are to have the opportunities to reach their potential.

There are many positives in the kingdom’s petrochemicals industry. Saudi Basic Industries Corporation (Sabic) is now a global force in the chemicals industry, with many experts predicting that it could become the world’s largest petrochemicals producer.

Energy major Saudi Aramco is also entering the market and there are several international chemical firms willing to transfer technology in order to be part of the attractive market in the kingdom.

For the Saudi petrochemicals market to taken on Western countries that have long dominated the market, research and development, highly trained local engineers and technology transfer are all essential. This coupled with cheap feedstock and government backing will ensure the opportunity will be there for Saudi Arabia to become a truly global player.

Striking a deal with a recognised global car manufacturer and persuading it to come to Saudi Arabia and make vehicles would provide a major boost to the kingdom’s petrochemicals industry and create demand for components.

Riyadh is aware of this and its attention appears to be turning in that direction.

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