Saudi Basic Industries Corp. (Sabic) is moving ahead with aggressive growth plans that include the start of a 6.4 billion-pound-per-year polyolefins plant in Al-Jubail, Saudi Arabia, by 2008.
The plant is a 50-50 joint venture with Mitsubishi Chemical Co. of Tokyo. Last year, Sabic - based in Riyadh, Saudi Arabia - added 8.4 billion pounds of polyolefins capacity in Yanbu.
Sabic's current and planned petrochemicals investments total $8 billion. The company already is the world's third-largest PE maker and sixth-largest PP maker.
``The [petrochemical] industry's center of gravity is moving toward the best-cost areas,'' Sabic Chief Financial Officer Mutlaq Al-Morished said at the Chemical Market Associates Inc. World Petrochemical Conference, held March 30-31 in Houston. ``As a result, the Middle East is the first choice of new capacity for petrochemicals.''
Al-Morished said he also expects sky-high oil prices to drop eventually.
``Oil is uncharacteristically high,'' he said. ``It doesn't reflect a shortage in the industry and should come down from its current levels.''
Overall, almost 23 billion pounds of annual PE production will be added in the region by 2010. Last year, almost half of the Mideast's petrochemical exports went to Asia. China alone accounted for 20 percent of the total. By 2010, the Middle East is expected to produce 20 percent of the world's ethylene.
Half of the world's ethylene capacity growth in the next five years will be in the Middle East. Iran will have 20 percent of the region's ethylene output by 2006, and even Iraq has the potential to be a significant player in the region if security improves, Al-Morished said.
Another change that could affect the world petrochemical climate could come in the way prices are set.
Al-Morished said prices currently are established by production from heavier, more-expensive feedstocks, rather than the low-cost feedstocks that will provide future growth.