Although Saudi Arabia's petrochemicals industry is expected to make a strong recovery in 2010 on theback of Chinese demand, this latest BMI Saudi Arabia Petrochemicals Report warns of severe projectdelays. These delays will be of at least two years, and will undermine the government's target of raisingtotal petrochemicals capacity from 60mn tpa in 2009 to 80mn tpa by 2015.In the short-term, the Saudi Arabian petrochemicals industry is set for a strong recovery in 2010,following an upturn in H209. Performance will vary, with fertilisers expected to revive earlier and at astronger pace , and engineering plastics representing the weakest market. There are fears that the Chinesegovernment's stimulus plan for petrochemicals, which is set to involve investment in new refineries tospeed up their construction, could create a problem of short-term over-supply in Saudi Arabia's exportmarkets in Asia. Much will depend on the strength of recovery in the automotive and home appliancesectors, which are expected to recover before the building sector does. The medium- to long-term growthof the Saudi Arabian petrochemicals industry will be highly dependent on Asian markets, notably China.By 2014, China could represent 35% of the global PP market and 20% of global PE demand. This willdirectly benefit Saudi Arabia's expanding petrochemicals industry, both domestically and in itsinvestments in China.BMI's forecasts for the Saudi Arabian petrochemical sector take into account long delays in projectcompletion. Saudi Aramco's venture into the petrochemicals sector could lead to cuts in the availabilityof ethane to its rivals. Other sources of feedstock will have to be used, pushing up plant costs andthreatening to make some projects unviable. We do not believe the proposed Ras Tanura complex, with a1.5mn tpa ethylene cracker, will come onstream before 2015. Petro Rabigh is a particular cause ofconcern, as its costs have risen from the initial outlay of US$4.3bn to over US$10bn. The commissioningof the Petro Rabigh complex began in Q209, having been delayed from Q408.Other delays are causing problems for Saudi Arabia's capacity targts. In January 2010, the Saudi Arabianoil ministry indicated that Saudi Aramco would be commissioned to construct the Jizan oil refinery,which could include an 800,000tpa PP plant using propylene from the refinery and, in a second stage, anolefins complex. The bidding process for the Jizan refinery project has been delayed several times due toa lack of interest. The project is currently running at least two years behind schedule as the governmenthas struggled, and failed, to attract foreign investor interest. The Saudi Kayan project, which forms amajor part of Saudi Arabia's petrochemicals push, is also facing severe delays. This is because thecompany has cancelled engineering, procurement and construction (EPC) contracts for amines and LDPEplants and reopened them for bidding. Consequently, Saudi Kayan is being delayed, with BMI expectingit to be completed in H212, as opposed to 2010, as was originally intended. Kayan has cancelled twoplants that formed part of its original plans for the complex. They are a 50,000 tonnes per annum (tpa)dimethyl formamide plant and a 20,000tpa choline chloride unit.In 2009 Saudi Arabia had olefins capacities of 12.93mn tpa ethylene and 4.5mn tpa propylene.Polyolefins capacities included 2.51mn tpa HDPE, 220,000tpa LDPE, 3.3mn tpa LLDPE, 4.14mn tpa PP,175,000tpa PS and 405,000tpa PVC. By 2014 BMI forecasts ethylene and propylene capacities will riseto 18.43mn tpa and 5.52mn tpa propylene. Total PE capacity will rise 16% to 8.32mn tpa, PP will rise11% to 5.52mn tpa, and PS capacity will remain unchanged.

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Saudi Arabia Petrochemicals Report Q2 2010
Published on February 2010
Report Summary
Although Saudi Arabia's petrochemicals industry is expected to make a strong recovery in 2010 on the
back of Chinese demand, this latest BMI Saudi Arabia Petrochemicals Report warns of severe project
delays. These delays will be of at least two years, and will undermine the government's target of raising
total petrochemicals capacity from 60mn tpa in 2009 to 80mn tpa by 2015.
In the short-term, the Saudi Arabian petrochemicals industry is set for a strong recovery in 2010,
following an upturn in H209. Performance will vary, with fertilisers expected to revive earlier and at a
stronger pace , and engineering plastics representing the weakest market. There are fears that the Chinese
government's stimulus plan for petrochemicals, which is set to involve investment in new refineries to
speed up their construction, could create a problem of short-term over-supply in Saudi Arabia's export
markets in Asia. Much will depend on the strength of recovery in the automotive and home appliance
sectors, which are expected to recover before the building sector does. The medium- to long-term growth
of the Saudi Arabian petrochemicals industry will be highly dependent on Asian markets, notably China.
By 2014, China could represent 35% of the global PP market and 20% of global PE demand. This will
directly benefit Saudi Arabia's expanding petrochemicals industry, both domestically and in its
investments in China.
BMI's forecasts for the Saudi Arabian petrochemical sector take into account long delays in project
completion. Saudi Aramco's venture into the petrochemicals sector could lead to cuts in the availability
of ethane to its rivals. Other sources of feedstock will have to be used, pushing up plant costs and
threatening to make some projects unviable. We do not believe the proposed Ras Tanura complex, with a
1.5mn tpa ethylene cracker, will come onstream before 2015. Petro Rabigh is a particular cause of
concern, as its costs have risen from the initial outlay of US$4.3bn to over US$10bn. The commissioning
of the Petro Rabigh complex began in Q209, having been delayed from Q408.
Other delays are causing problems for Saudi Arabia's capacity targts. In January 2010, the Saudi Arabian
oil ministry indicated that Saudi Aramco would be commissioned to construct the Jizan oil refinery,
which could include an 800,000tpa PP plant using propylene from the refinery and, in a second stage, an
olefins complex. The bidding process for the Jizan refinery project has been delayed several times due to
a lack of interest. The project is currently running at least two years behind schedule as the government
has struggled, and failed, to attract foreign investor interest. The Saudi Kayan project, which forms a
major part of Saudi Arabia's petrochemicals push, is also facing severe delays. This is because the
company has cancelled engineering, procurement and construction (EPC) contracts for amines and LDPE
plants and reopened them for bidding. Consequently, Saudi Kayan is being delayed, with BMI expecting
it to be completed in H212, as opposed to 2010, as was originally intended. Kayan has cancelled two
plants that formed part of its original plans for the complex. They are a 50,000 tonnes per annum (tpa)
dimethyl formamide plant and a 20,000tpa choline chloride unit.
In 2009 Saudi Arabia had olefins capacities of 12.93mn tpa ethylene and 4.5mn tpa propylene.
Polyolefins capacities included 2.51mn tpa HDPE, 220,000tpa LDPE, 3.3mn tpa LLDPE, 4.14mn tpa PP,
175,000tpa PS and 405,000tpa PVC. By 2014 BMI forecasts ethylene and propylene capacities will rise
to 18.43mn tpa and 5.52mn tpa propylene. Total PE capacity will rise 16% to 8.32mn tpa, PP will rise
11% to 5.52mn tpa, and PS capacity will remain unchanged.
Saudi Arabia Petrochemicals Report Q2 2010 Page 1/5

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Table of Content
Executive Summary ..5
SWOT Analysis .....7
Saudi Arabia Petrochemicals Industry SWOT ........... 7
Saudi Arabia Political SWOT ........ 8
Saudi Arabia Economic SWOT ...... 8
Saudi Arabia Business Environment SWOT ... 9
Global Market Overview .................................10
Table: World Ethylene Production By Country, 2009 And 2014 ('000 tonnes capacity) ............. 10
Table: World Petrochemicals Capacities, 2009 ('000 tpa) .................................. 14
Global Oil Products Price Outlook .............. 19
Table: Oil Product Price Assumptions, Q409-Q410 (US$/bbl) ............................ 20
Table: Oil Product Price Forecasts (US$/bbl) ......... 21
Gulf Regional Overview .................................23
Table: Announced Ethylene Crackers In The Gulf Region ................................... 24
Saudi Arabia Market Overview .......................26
Table: Saudi Arabia's Ethylene Capacity .... 29
Table: Saudi Arabia's Ethylene Projects ..... 30
Table: Saudi Arabia's Polyethylene Capacity .......... 30
Table: Saudi Arabia's Polyethylene Projects ........... 31
Table: Saudi Arabia's Polypropylene Capacity ....... 31
Table: Saudi Arabia's Polypropylene Projects ........ 32
Table: Saudi Arabia's Cracker Capacity, 2007-2013 ('000tpa) ........................... 32
Petrochemicals Business Environment ........33
Table: Middle East And Africa Petrochemicals Business Environment Ratings ... 33
Industry Trends And Developments .............36
Projects And Expansions ............. 36
Finance ................. 41
WTO Accession ..... 41
Saudi Arabia-China Links ............ 42
Saudi Arabia-India Links ............. 43
Industry Developments ' Related Industries 44
Industry Forecast Scenario ............................45
Table: Saudi Arabia's Petrochemicals Sector, 2006-2014 ('000tpa, unless otherwise stated) .... 47
Macroeconomic Outlook .............. 48
Saudi Arabia ' Economic Activity ............... 50
Historical Data & Forecasts ........ 50
Company Monitor ....51
ChevronPhillips .... 51
ExxonMobil ........... 52
Royal Dutch Shell . 53
Sabic ..................... 54
Sipchem ................ 58
Country Snapshot: Saudi Arabia Demographic Data .........59
Section 1: Population ................... 59
Saudi Arabia Petrochemicals Report Q2 2010 Page 2/5

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Table: Demographic Indicators, 2005-2030 59
Table: Rural/Urban Breakdown, 2005-2030 ........... 60
Section 2: Education And Healthcare .......... 60
Table: Education, 2003-2005 ...... 60
Table: Vital Statistics, 2005-2030 60
Section 3: Labour Market And Spending Power ...... 61
Table: Employment Indicators, 1999-2006 .. 61
Table: Consumer Expenditure, 2000-2012 (US$) .... 61
BMI Methodology ....62
How We Generate Our Industry Forecasts .. 62
Chemicals and Petrochemicals Industry ...... 62
Cross Checks ........ 63
Business Environment Ratings ..... 64
Table: Petrochemicals Business Environment Indicators And Rationale .............. 64
Weighting .............. 65
Table: Weighting Of Indicators ... 65
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