OVERVIEW

The unprecedented scale of the expansion of petrochemicals production being implemented in Saudi Arabia (and the opportunity for US equipment exporters) makes estimates of market size data extremely difficult.  

Major petrochemical projects are being implemented as part of the country’s strategy of adding value downstream.  The pace of implementation is constrained only by a worldwide shortage of experienced project managers and engineers.  Saudi Arabia, flush with funds from the continuing high world prices for it’s crude exports, currently has more than 31 ongoing and planned petrochemical projects valued at more that $57.3 billion.  U.S. companies have around 80% involvement in these projects, directly and through local joint venture partners, in the form of proprietary technology licensors; project management contractors; front-end engineering design (FEED) contractors; engineering, procurement, and construction contractors.

Receptivity to US products and services is exceptionally high and the current weakness in the value of the US dollar reinforces the competitiveness of US exports of goods and services.  Nevertheless, major competitors come from Europe, Japan, South Korea, and Australia appear determined to participate in this lucrative market.  The 2006 annual report of Saudi Arabian Basic Industries Corp. (SABIC), one of the ten largest producers of petrochemicals in the world, mentioned that its petrochemical plants produced 45.1 million metric tons achieving a 7% increase over production figures in 2005 (www.sabic.com).

The total sales volume of petrochemicals in 2006 was $20 billion. SABIC has started looking downstream for the next wave of expansion projects. SABIC’s management reported that up till 2008, the Group had a full slate of projects. Every year, SABIC supplies over 20 million metric tons of basic petrochemical products like ethylene, methanol, and methyl tertiary butyl ether (MTBE).

Best Prospects/Services                                                            

There is a huge demand for the products and services of U.S. manufacturers/suppliers of industrial equipment used in the petrochemical industry.  U.S. companies are expected to avail themselves of excellent opportunities evolving from new projects undertaken by the state-owned SABIC and private sector petrochemical companies.

Furthermore, U.S. design and engineering companies/licensors have good opportunities to license their processes or provide technical know-how through licensing agreements and through active participation in international tenders to manage, design, procure and build petrochemical complexes.

The new foreign investment law encourages foreign companies to establish directly-owned industrial and non-industrial ventures in Saudi Arabia.  Foreign investors, interested in setting-up a facility to produce petrochemicals must apply for a license and a commercial registration.  Additional information can be accessed at the website of the Saudi Arabian General Investment Authority at www.sagia.org

For more information please contact:

Habbeeb Saeed at habeeb.saeed@N0SPAM.mail.doc.gov in Riyadh
Yousef Daqqaq at yousef.daqqaq@N0SPAM.mail.doc.gov in Jeddah
Ishtiaq Hussain at ishtiaq.hussain@N0SPAM.mail.doc.gov  in Dhaharan