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SAUDI ARABIA - Integrated & Downstream Ventures.

In parallel, the government and the state-owned NOC Saudi Aramco have launched a new drive to stimulate development of integrated chemical industries to boost employment in the kingdom. PetroRabigh, a refinery and petrochemicals complex at Rabigh on the Red Sea is being developed with Sumitomo Chemcials of Japan at a cost of $8 bn (see down14SaudiRefOct3-05).

This is one of three petrochemical complexes being developed by Saudi Aramco with the aim of encouraging the growth of downstream industries. For the downstream there is emphasis on the Saudi private sector.

While European firms missed out on the first wave of investment in SABIC ventures in the 1980s, Mo'ayyed al-Qurtas, CEO of the private National Industrialisation Company (NIC) says they cannot afford to do so this time round. Saudi access to raw materials and its proximity to the fast growing economies of Asia give it a competitive advantage over its European and US counterparts in the petrochemicals industries. Qurtas says petrochemical firms in the past focused their downstream operations in Europe and the US, but "within three to five days sailing from Saudi Arabia you have a very substantial mass of the world's population and potential for growth".

Khalid al-Falih, director of Saudi Aramco's gas operations, says: "The view that higher...energy prices are with us to stay is driving industry to converge on the Middle East in general and Saudi Arabia in particular as the location of choice for petrochemicals". But while many companies are showing interest, few have signed up.

Falih adds: "Any company that wants to be number one or two will exclude themselves". But, he says, there is plenty of room for "niche players, who will come and pick up the pieces that the big players don't want".

MEED on Sept. 23 quoted Hugo Heath of HSBC as saying: "...there are very good reasons for being in Saudi Arabia. The question is who can get in and on what basis". He said there was huge interest, but there was a limitation...by the difficulty of bringing all the different elements together - from finance, to government allocations, to finding a local partner". He pointed out: "Some of these projects strike me as being somewhat analogous to producing a movie - someone's got to do the script, act, bring in the finance - it's quite a juggle".
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Publication:APS Review Downstream Trends
Date:Oct 10, 2005
Words:385
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