Saudi Arabia

Petrochemicals Report
Executive Summary
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Saudi Arabia Petrochemicals Report Published Date: 01 Oct 2017

Table of contents
BMI Industry View 7

SWOT 8

Political 10

Economic 12

Operational Risk 14

Industry Forecast 16
Table: Saudi Arabia Petrochemicals Capacity, 2012-2020 20
Macroeconomic Forecast 23

Economic Analysis 23

Non-Oil Economy To Remain In Recession 24

Banking Sector Exposure Compounding Slowdown 25

Industry Risk/Reward Index 27

MEA Petrochemicals Risk/Reward Index 27

Table: MEA Petrochemicals Risk/Reward Index - Q1 2017 31
Saudi Arabia Petrochemicals Risk/Reward Index 32

Market Overview 34
Table: Saudi Cracker Capacity, '000tpa 37
Industry Trends And Developments 38

Developments 38

Fertiliser 45

Upstream 46

Company Profile 50

Sabic 50

Sipchem 54

Chevron Phillips 56

ExxonMobil 58

Royal Dutch Shell 60

Saudi Aramco 62

Regional Overview 69

Middle East And Africa Overview 69

Global Industry Overview 75

Demographic Forecast 84

Demographic Outlook 84
Table: Population Headline Indicators (Saudi Arabia 1990-2025) 85
Table: Key Population Ratios (Saudi Arabia 1990-2025) 85
Table: Urban/Rural Population & Life Expectancy (Saudi Arabia 1990-2025) 86
Table: Population By Age Group (Saudi Arabia 1990-2025) 86
Table: Population By Age Group % (Saudi Arabia 1990-2025) 87
Glossary 89
Table: Glossary Of Petrochemicals Terms 89
Methodology 90

Industry Forecast Methodology 90

Risk/Reward Index Methodology 92

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Table: Petrochemicals Risk/Reward Index Indicators 93
Table: Weighting Of Indicators 94

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 Saudi Arabia Petrochemicals Report Published Date: 01 Oct 2017

Saudi Arabia's petrochemicals industry continues to expand in 2017 with the completion of Phase II of the
PetroRabigh complex, a joint venture between Saudi Aramco and Sumitomo Chemical . This followed the opening in
2016 of the Sadara complex, owned by Saudi Aramco and Dow Chemical , with capacity to produce 3.0mn tpa of
ethylene and polyethylene (PE).

With further plans being considered, Saudi Arabia's petrochemicals expansion will increasingly utilise liquid
feedstock in order to take advantage of oil prices, which have remained low despite in spite of production cuts.
Low oil prices have also reduced government revenues, prompting a reduction in feedstock subsidies that are
undermining the competitiveness of Saudi petrochemicals.

Saudi Aramco is seeking to list a stake on the Saudi stock exchange, while Deputy Crown Prince Mohammed
Bin Salman has called for both Aramco and Sabic to be owned by the state's Public Investment Fund, which
currently holds 70% of the latter's stock. The government owns Aramco directly. The IPO is expected in late
2018, following a full audit of its assets, which are potentially worth USD2,000bn. The exercise should give the
clearest indication of the Kingdom's total energy resources and its true feedstock potential for the
petrochemicals industry. The IPO, the largest in history, will raise around USD100bn and support the
company's investment plans.

● By 2021, we forecast ethylene and propylene capacities will rise to 18.2mn tpa and 7.0mn tpa, respectively,
with Saudi Kayan's commercial operations set to contribute the bulk of the increase. Our projections for
petrochemicals capacity are based on planned projects, but it is possible some may not come to fruition due
to the restriction on ethane feedstock and the possibility of a lacklustre recovery in the Chinese market.
● The growing restrictions on gas supply also means that feedstock prices could rise further. Plant owners who
are considering new plant expansions are tightening up the contract terms and conditions they are offering
to contractors. Producers are also examining the feasibility of adding greater quantities of high value-added
specialty products to their output.
● Saudi Arabia continues to top our Middle East and Africa Petrochemicals Risk/Reward Index, with its score
down 0.2 points since the previous quarter at 75.7 points. The decline is the result of risks posed by Saudi
Arabia's dispute with Qatar, which has undermined regional risk. This has narrowed its lead over Iran by 0.2
points to 10.1 points. While its lead over its regional arch-rival seems unassailable, , in terms of rewards in
basic chemicals, Iran is providing a significant challenge to the regional leader as it ramps up production
volumes

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Saudi Arabia Petrochemicals Report Published Date: 01 Oct 2017

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