Saudi Arabia's $100 Billion of Investments Back Downstream Projects Over Next Decade

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A few months after the 2008 financial global crisis diminished development confidence and caused projects to be postponed indefinitely or cancelled, Industrial Info said the plans that had been shelved would not gather dust forever. Developers, project managers and engineers do not suddenly give up on what they have visualized, or on doing what they do best; they will be waiting for the first opportunity to dust off the plans and get going again.

Project pipelines are filling up every day in the Middle East; most importantly, major long-term investments are being set aside to drive projects through 2030 and beyond. This project investment is driven by the need to diversify industrial activity away from a raw primary fossil-fuel resource base exploitation, and cater to the needs of ever-younger populations, who are career- and lifestyle-driven. The move is toward converting the hydrocarbon resource gift into downstream, value-added, job-creating industrial processes and applications.

Saudi Aramco has said that its downstream investments will exceed $100 billion over the next decade, as global demand for oil rises 25% over the next 25 years.

Speaking at the Middle East PetroTech conference in Bahrain, Saudi Aramco President and Chief Executive Officer Khalid Al-Falkih said: "The thought of a thriving refining and petrochemical industry in the Gulf once seemed an elusive dream, given the dominance of the big American and European manufacturing hubs. Today, SABIC (Saudi Arabian Basic Industries Corporation) is one of the top five global petrochemical companies, and Saudi Aramco and the Kuwait National Petroleum Corporation are two of the world's top-tier refiners--ensuring that the Gulf is known for more than just oil wells, tank farms and loading terminals."

"Over the last three decades, our region has continued to import technologies and primarily export lower-value petrochemical bulk commodities, rather than adding greater value to our hydrocarbons through more product diversification and specialization, which in turn enables the creation of secondary and tertiary industries to produce semi-finished and finished goods for export.

"As result of both global demographic growth and rising standards of living in the developing world, we see global demand for oil growing by one-quarter over the next 25 years. Since raw hydrocarbons must be converted into useful products before they are consumed, we are confident that the prospects for the downstream industry are similarly bright."

The company's refining capacity will be linked to robust marketing networks with strong brands and to world-scale petrochemical plants--in fact, a growing proportion of the hydrocarbon molecules produced will go to chemicals, given that this sector is set to grow at multiples of global gross domestic product, Al-Falkih added.

For related information, see February 12 2012, article - Saudi Arabia Plans $109 Billion Investment in Renewables by 2032.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.