The shale gas story could have important long-term implications for Saudi-based petrochemical companies in terms of margins and competitiveness, according to analysts.

They were reacting to a statement made in Davos by Saudi Basic Industries Corp. (SABIC) CEO Mohamed Al-Mady who said the company is in talks with several US firms to invest in the US shale gas industry, and expects to enter the market this year.

John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, said: “It makes sense for SABIC to be looking into investing in the US and taking advantage of the shale gas revolution. To be returning to the US was a few years ago unimaginable and is today economically feasible even for global giants like SABIC, thanks due to hydraulic fracking technology,” Sfakianakis told Arab News.

“I won’t be surprised if other Saudi petrochemical firms look for opportunities in the US.”

Speaking to Reuters at the World Economic Forum in Davos, Al-Mady said: “We’re currently in talks with a few big names in the US for investment in shale gas. We expect to enter the market sometime this year. This will be great for SABIC and will globalize our operations.”

Al-Mady later said the investment would be in downstream operations.

Commenting on Al-Mady’s remarks, Jarmo T. Kotilaine, a regional analyst, told Arab News: “The North American shale market is an increasingly important, still growing part of the global hydrocarbons market and hence a logical addition to an energy portfolio.”

He added: “The technology in the sector is likely to be of growing applicability as shale developments get under way elsewhere, probably in the first instance mainly Europe and China, but one day quite conceivably also the Middle East.”

Al-Mady said last year that SABIC planned to build a shale gas cracker in the US.