Petroleum and Saudi Arabia

The Middle East is probably the most important influence on the global petrochemical industry today and will remain so for many years to come. However, prospects of a war in Iraq are raising concerns, and logistical and feedstock challenges could hem in the region's growth. Saudi Basic Industries Corp., or SABIC, the majority of which is owned by the Saudi Arabian government, has grown to 40.6 million metric tons of petrochemical production and sales of $9 billion in 2002 to become the 11th largest petrochemical producer in the world. Iran, through the government-owned National Petrochemical Co., has made its petrochemical industry a strong second to Saudi Arabia. Iranian petrochemical output was 12.5 million metric tones in 2001. A number of other countries in the region, including the United Arab Emirates, Kuwait, Qatar, Oman, and Egypt, have either completed major petrochemical projects or are planning them.
SABIC, created 24 years ago to add value to Saudi Arabia's massive hydrocarbon resources, has grown into one of the world's largest and lowest-cost petrochemical producers, with more than 25 million m.t./year of capacity, almost all of which is joint ventures. SABIC vice chairman and managing director Mohamed H. Al-Mady says that the company will expand to keep pace with projected petrochemical demand growth of 5%-10%/year, adding a further 13 million m.t./year of new capacity by 2010. Access to cheap raw materials gives Sabic a big cost benefit over its competition.
It pays Saudi Aramco (Riyadh), another government controlled firm, 75 cts/million Btu for its gas feedstock, compared with more than $5/million Btu being paid by petrochemical producers on the U.S. Gulf Coast at CW press time. Most of Sabic's petrochemical complexes are based on gas. The company recently began production of aromatics, however, using the liquefied petroleum gas (LPG)-- based Cyclar process. Sabic obtains LPG at a discount of 30% to international prices. Sabic last year