Saudi Arabia and the emirate of Abu Dhabi plan to more than double their production of petrochemicals to cash in on growing demand.
Both Persian Gulf oil producers are prioritizing a more diverse output of petrochemicals to help wean their economies away from crude. They want to produce chemicals that are used in plastics to tap growing consumer-goods markets, particularly in Asia, and to make plastics themselves.
“By 2030, Asia will become the main driver of global economic growth and will also represent the world’s largest market for consumer goods,” Sultan Ahmed Al Jaber, chief executive officer of Abu Dhabi National Oil Co., said Monday at a conference in Dubai. “Demand for petrochemicals by 2030 will in fact double, representing an unprecedented market opportunity.”
Adnoc, based in the capital of the United Arab Emirates, is targeting an increase in petrochemicals output to 11.4 million tons a year by 2025, up from 4.5 million currently, Al Jaber said.
State-run Saudi Arabian Oil Co. will boost petrochemicals output to 34 million tons a year by 2030 from 12 million tons a year, Abdulaziz Al-Judaimi, head of the company’s downstream business, said at the conference. By next year, Saudi Aramco, as the company is known, will have integrated chemical-production facilities at nine of its 15 crude-processing plants, he said.
Like other oil states in the Gulf region, Saudi Arabia and Abu Dhabi face competition from the U.S., where chemical makers are benefiting from increased output of natural gas, a feedstock for chemicals, at shale wells. Hydraulic fracturing, or fracking, in the U.S. has “changed the market picture” by providing abundant ethane gas for chemical expansion there, Yousef Al Benyan, CEO of Saudi Basic Industries Corp., said at the event.
Petrochemical producers in the Gulf may need to merge with or buy rivals to tap greater pools of capital and diversify their output, Al Benyan said.
Sabic, as Saudi Basic is known, is working with Saudi Aramco on a project to make chemicals directly from crude as regional gas supplies are too limited to meet planned growth in the industry, Al Benyan and Aramco’s Al-Judaimi said. Adnoc’s Al Jaber said his company will develop plants to use naphtha, an oil product, to make chemicals.
Saudi Aramco’s Sadara Chemical Co. plant includes a unit capable of processing either naphtha or gas. Aramco is to inaugurate the facility on Tuesday.
By Anthony DiPaola