Like the wider global commodity complex, petrochemical prices have soared in 2021, lifting the prospects for Saudi and GCC petrochemical producers.

The Global ICIS Petrochemical Index has jumped 34.33% year to date, with the US Gulf Index up 65%, even as the NE Asia Index increased by a moderate 22.96%, ICIS data shows.

Benzene saw the fastest year-to-date growth in prices with an 80.1% increase. The other top performing petrochemical products are toluene (up 85%) and paraxylene (up 70.8%).

“The chemical and petrochemical industry in the Arabian Gulf is poised for growth in 2021-2022, as the regional and global economy is forecast to recover in the aftermath of the COVID-19 outbreak,” according to the Gulf Petrochemicals and Chemicals Association(GPCA), an industry body

“The regional chemical industry is anticipated to see growth across all key indicators, including chemical sales revenue, production output and international trade off the back of an increase in regional economic activity, supported by a rapid vaccination roll-out, and the global economic rebound,” GPCA added.

The association expects higher oil and natural gas prices, and strong economic and manufacturing activity in China – GCC’s largest export market – to boost the sector’s outlook.

However, supply chain delays and COVID-19 related disruptions will lead to an increase in the cost of commodities, including some of the chemical industry’s key inputs

“The chemical industry in the region is emerging from a period of significant disruption, subdued growth and an unprecedented decrease in consumer demand in a range of end-user sectors, which chemical producers serve,” said Dr. Abdulwahab Al-Sadoun, secretary general of GPCA. “The Arabian Gulf region is now entering into a gradual recovery, which will require it to maintain resilience and keep production output high in order to cater to end-user markets at home, in Asia, and the world.”

 

INVESTMENT DEAL WITH OMAN

On the sidelines of Saudi Crown Prince Mohammed bin Salman Al Saud’s visit to Oman in December, Saudi Arabian Basic Industries Corp. (SABIC), signed a memorandum of understanding (MoU) with Oman’s state-owned energy holding company OQ. The deal will support the study on developing a petrochemical project in the sultanate’s Special Economic Zone of Duqm (SEZAD).

The project under study is a steam cracker unit (SCU) and derivatives units producing olefins derivatives (ethylene and propylene), which are expected to utilise the feedstock by-products.

In November, SABIC started the Ethylene Glycol Plant – 3 at its manufacturing affiliate, Jubail United Petrochemical Company (United), with an estimated annual production capacity of 700,000 metric tonnes of monoethylene glycol.

The additional capacity will ensure SABIC maintains its position as the world’s largest producer of ethylene glycol. The new plant will use innovative technologies to reduce emissions, and increase energy efficiency in line with SABIC’s commitment to minimise environmental impact through sustainable use of resources.

“This successful start-up surely adds to our global ethylene glycols footprint, and strengthens our reliability to supply to our customers, bringing us closer to our vision to be the preferred world leader in chemicals,” said Abdulrahman Alfageeh, SABIC executive vice president, Petrochemicals.

SABIC's revenues in the third quarter reached USD 11.65 billion, an increase of 3% compared to the previous quarter. Net income during the quarter reached USD 1.49 billion, a decrease of 27% compared to the second quarter of 2021.

“SABIC announced the start of commissioning activities and preparations for the initial start-up of the petrochemicals joint venture project in the US Gulf Coast (Gulf Coast Growth Ventures),” said Yousef Abdullah Al-Benyan, vice chairman and chief executive officer of SABIC. “This project supports SABIC’s global growth strategy and its aim to diversify its feedstock sources, and strengthens its petrochemical manufacturing presence in North America.”

 

NATURAL GAS INVESTMENT

Meanwhile, Saudi Arabian Oil Company, or Aramco, has awarded an engineering, procurement and construction contract worth USD 10 billion, to develop the Jafurah unconventional gas field, the largest non-associated gas field in the kingdom.

With an estimated 200 trillion standard cubic feet of gas in place, the Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East.

The shale play, spread across an area of 17,000 square kilometres, is expected to produce two billion standard cubic feet per day (scfd) of shale gas by 2030, including 418 million scfd of ethane, and around 630,000 barrels per day of gas liquids and condensates, which are essential feedstock for the growing petrochemical industry.

“It will also allow Aramco to tap into high-value feedstocks for use in the expanding downstream petrochemicals industry, and our aim is to significantly increase our gas production capacity over the next decade to meet demand growth,” said Amin Nasser, Aramco president and CEO.