Saudi Arabia expecting chemical production to reach nearly 100 million tonnes/day by 2016 on access to inexpensive, abundant ethane; total investments in petrochemical plants expected to reach US$150B

LOS ANGELES , December 15, 2011 () – By 2016, Saudi Arabia is expecting to produce nearly 100 million tonnes yearly of polymers, chemicals and petrochemicals, Reuters reported Dec. 14, citing a government official statement in a Saudi state news agency report on the same day.

Prince Faisal bin Turki, an adviser at the Saudi oil ministry, also said that by 2016, total Saudi investments in petrochemical facilities are likely to reach US$150 billion.

Reuters noted that in 2009, Ali al-Naimi, a Saudi oil minister, said that the country's petrochemical production would reach 80 million tonnes annually in 2015 from a 60 million baseline that year. By 2020, Saudi Basic Industries Corp., or SABIC, expects to up output to 130 million tonnes. SABIC is a government-owned producer.

One driver of Saudi Arabian petrochemical expansion is the country's access to abundant and less expensive ethane, which is set at US$0.75 per million British thermal units, well below prices abroad. The volume is also there: Saudi Arabian Oil Co. (Saudi Aramco) provided 1.33 trillion BTU/day of ethane last year compared with 1.11 trillion BTU/day in 2009, Reuters reported, citing the company's 2010 annual report.

By 2020, Gulf region petrochemical output could reach a market value of US$150 billion to US$200 billion per year, according to Khalid al-Falih, Saudi Aramco's CEO in a 2010 statement. Petrochemical output in 2010 was $40 billion, al-Falih added.

The primary source of this article is Reuters, London, England, Dec. 14, 2011.

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