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Saudi Arabia is the region's largest producer of petrochemicals, with a 50% share of the total output, while Kuwait produces around 9% and Oman and Qatar 5% each. The UAE and Bahrain export 3% and 1% respectively, of the region's total petrochemicals output. Nor are the major Gulf players resting on their laurels. Mindful of the need to preserve their long-term income streams, Gulf governments have pledged to invest record sums in maintaining and improving the region's petrochemicals capacity.
"Any country which has huge hydrocarbon reserves must put them to the best possible use," says Shashank Shekhar, an associate editor at industry analysts Platts. "The GCC countries have the financial muscle to do what they want, and right now there is a very strong political will to develop the petrochemicals sector.
"Investments in the petrochemicals sector are of course a part of the economic diversification attempts of Gulf governments," he adds. "They are looking for better, more lucrative uses of their hydrocarbon reserves."
Saudi looks to raise petrochemicals output
By spending big on facilities including those at Jubail Industrial City and Ruwais, Saudi plans to raise its total petrochemicals output to 70 million tonnes by 2015, from the current production level of 53.2 million. Meanwhile state-run Kuwait Petroleum Corp (KPC) has said it will invest approximately $90bn over the next five years in its oil and gas businesses and growth strategy. "On the oil sector capital programme, we are well on track and poised to spend around $90bn in the coming five years," says Hashin Al-Rifai, a planning manager at KPC. "That is going to mushroom to $340bn over the 2030 [strategic] plan period."
For Saudi, the attraction of petrochemicals investment is social as well as financial. The industry is hugely important because of the jobs that it brings, and Saudi in particular faces an unemployment crisis - according to the country's Central Department of Statistics and Information, some 39.3% of Saudis between the ages of 20 and 24 were unemployed in 2009, up from 28.5% in 2000. What better way to occupy young minds, than working on the development of lucrative petrochemicals products?
"One of the best uses for hydrocarbons is in the petrochemicals sector, not the power sector - you get higher margins and you provide a high number of employment opportunities to the population," says Shekhar at Platts. "The further downstream you go in the hydrocarbons industry, and the more specialised the chemicals, the more jobs are provided in terms of per capita investment.
"Saudi has huge oil and gas reserves, has the financial power to make necessary investments, and has the need to provide employment for its citizens," he continues. "It is developing the industry in a complete fashion, working on research and development, and using universities to create special bodies that concentrate solely on petrochemicals research. It's a holistic approach."
UAE also planning to boost petrochemicals figures
In the UAE, which expects to more than double its current output to 7.8 million tonnes by 2015, Abu Dhabi is leading the way.
