RIYADH — The Saudi petrochemical industry is vital to the Kingdom’s non-oil economy, Jadwa Investment said in its Petrochemicals and the Vision 2030 report.
In value terms, chemical and plastic exports from Saudi Arabia amounted to $30 billion (SR115 billion) in 2015, comprising a substantial 60 percent share of total non-oil exports.
The report said “the prominent role of petrochemicals in the non-oil economy means it has been identified by both the National Transformation Program (NTP) 2020 and Vision 2030 as one of the sectors to lead the push away from fossil fuel reliance.”
The implementation of the NTP 2020 targets will help move the petrochemical sector towards increased downstream specialty and end product capacity.
The report added that the “the implementation of the NTP 2020 targets will help move the sector toward increased downstream specialty and end product capacity. This, in turn, will not only help achieve growth in the Kingdom’s non-oil exports, but also establish a higher value adding manufacturing base, which creates employment opportunities for Saudi nationals.”
The report noted that “the restructuring of the petrochemical sector comes at a time when it is already facing up to a number of challenges, both at home and abroad. Besides seeing a drop in global chemical prices in the last two years, the sector has also seen domestic feedstock prices being raise in 2016. In addition, global competition is set to intensify, especially from the US and China, where significant rises in petrochemical capacity are expected in the next few years.”
The report claimed that “all these factors combined will re-shape the petrochemical industry in the Kingdom, but, at the same time, the government has demonstrated, through both the Vision and NTP, that the sector’s importance to the Saudi economy will not be allowed to diminish.”
Moreover, the report provided an outlook on global petrochemical demand, supply, and discussed the likely impact of the recent energy price reform in Saudi Arabia on the petrochemical sector. — SG