DAMMAM, 18 May 2004 — The First Saudi Arabian International Gas Conference came to an end yesterday with participants sounding optimism over the phenomenal growth prospects of the gas sector in the Kingdom, which will create jobs and provide opportunities for the private sector.
The adviser at the Ministry of Petroleum and Minerals, Prince Faisal ibn Turki said the conference was a big step for the gas sector and hoped that the conference would pave the way for the smooth execution of new ventures.
The third and the concluding day of the conference focused on petrochemicals and highlighted various aspects of investment opportunities in primary upstream petrochemical projects. The conference also discussed potential secondary and tertiary investment opportunities in petrochemicals.
A presentation by Khalid Al-Falih, vice president, new business development at Saudi Aramco, traced the history of petrochemical industry in the country and its phenomenal growth. He said that the number of chemical plants in the Kingdom grew from 25 with a value of SR1.875 billion to 300 in 2000 with an investment of SR75 billion. He estimated the number would hit 500 by the end of next year. Al-Falih said there was currently 235 trillion cubic feet proven reserves of which 60 percent was associated with oil and 40 percent non-associated with a historical annual growth of 5 trillion cubic feet.
The new mega projects will have more than SR11 billion investment in addition to investments made by Saudi Aramco for the production of ethane and NGL, he said. Ethylene production will more than double from 6 million tons at the end of 2003 to 13 million tons by 2008.
Al-Falih said the deal signed with Japan’s Sumitomo Corporation will have an investment of more than SR16 billion. “New supplies will drive SR75 billion in downstream investment creating more than 12,000 new direct jobs and adding billions to the Kingdom’s GDP,” Al-Falih said. Nearly 17 new projects will come on stream in this sector between 2004 and 2008, he added.
According to an Arab Petroleum Investments (APICORP) estimate the gas chain, including power generation, will require nearly SR79 billion investments over the next five years. Rasheed Al-Maraj, chief executive and general manager of APICORP, said that this pattern of growing investment in the gas chain is likely to accelerate beyond 2008 as upstream gas gains momentum. In a larger perspective, he estimated that the Arab region will require investments of more than SR112 billion per year out of which SR26 billion per year in Saudi Arabia is by far the largest.
Al-Maraj also discussed the lending potential and limits of the Saudi local banks. He concluded that capital requirements along the Saudi hydrocarbon value chains will be massive and that gas chain investments will be larger than oil. He said that the borrowing requirements will be a major challenge for local banks.
