The Gulf countries themselves are considered a promising market for petrochemical products. In the next five years Saudi based manufacturers alone are predicted to double the current 1 million tonnes-a-year of polymers they currently convert into items such as fibreglass products, pipes, storage products, insulation materials and home goods.
The Saudi Arabian General Investment Authority says the Kingdom's downstream petrochemicals sector comprises 600 conversion plants utilising mainly polypropylene, polyethylene and polyvinyl chloride as feedstocks.
There is a strategic push to raise local petrochemical production. This is expected to lower the cost of plastic resins in the local market serving to further stimulate development of domestic downstream industries and employment in the sector.
A marker is the huge $8 billion expansion of Saudi Arabia's Red Sea refinery at Rabigh. Apart from raising Aramco's oil refining capacity it will also lead to Saudi Aramco's first petrochemical production when completed in 2008. Similar integration between existing refinery ventures and add on petrochemical developments are also being considered for Aramco refineries at Yanbu and Ras Tanura.
The aim at Rabigh is to make it into a fully developed industrial centre on a par with Jubail and Yanbu. This would see the complex become a distribution point supplying Saudi private sector manufacturing enterprises with downstream petrochemical products for both foreign and domestic markets
Contracts were awarded for the expansion of the refinery earlier this year. In order to develop an integrated industrial complex at Rabigh, which produces 400,000 barrels-a-day of petrol, Aramco has joined forces with Japan's Sumitomo Chemical Company.
By combining petrochemicals capability to the existing refinery economies of scale are expected to be achieved in the use of feedstock and the sharing of power and water and other utilities.
Sumitomo will help produce ethylene, propylene type products and provide sales and distribution expertise to the joint venture for which Aramco will supply gas. In later stages an aromatics complex and other units are being considered.
Private sector jobs
The government is particularly keen to develop the Saudi private sector's take up of the opportunities provided by increased petrochemical production because of its potential to create employment.
Several thousand jobs are likely to become available for Saudis in downstream manufacturing ventures as a result of current investment in the refined products and petrochemicals sectors.
A key to securing the development of petrochemical production in the Kingdom is the supply of natural gas. Aramco currently produces around 5 billion cubic feet-a-day. This is expected to rise more than 70% to 7 billion cfd by 2009.
Ethane production is also increasing and is projected to more than double to 1.1 billion cfd in the next five years as additional supply comes on stream from the Aramco's natural gas liquids development at Hawiyah and from fields in Eastern Province. There is also the long-term assurance of supplies from massive gas programmes in the southern Rub al-Khali Empty Quarter.