September, 2011 www.alahli.


The Kingdom’s Comparative Advantages Propel its Global Position in Petrochemicals
Saudi Petrochemical Sector Review

2 2 3 Introduction What are Petrochemicals? Petrochemical Prices and Applications The Saudi Petrochemical Sector The Effect of the Economic Crisis Market Size and Trends

Executive Summary



5 8

Current Petrochemical Projects

10 Petrochemical Leaders and Financing Structures 11 Petrochemical Outlook and Future Challenges 12 Conclusion
• •

Said A. Al Shaikh
Group Chief Economist |

Paulina Chahine
Senior Economist |

Saudi Arabia’s vast reserves of cheaply extractable feedstock, proximity to Asian markets, and supportive government policies give its Petrochemical sector a competitive advantage in the global market. The global economic crisis reduced the global demand for all petrochemicals and their derivatives, thereby causing prices to plummet. High-cost producers around the globe were squeezed out. Domestic producers were not immune to the economic crisis. The decline in global demand and oil prices lead to reduced earnings. The crisis also showed the growing dominance of Saudi producers as their margins allowed them to ride out this period of weakness relatively comfortably. The slowdown has also created a supply glut with large scale capacity expansions in 2009 and 2010 from the Middle East and Asia, expected to come onstream post 2012. Global olefin and derivative consumption is forecast to have recovered in 2010 as demand from Asia, particularly China and India, accelerates. This resulted in the expansion of production in 2010, thereby raising exports by 13% to 31 million tonnes Furthermore, political turmoil in the MENA region is expected to increase oil and petrochemical prices in the short term. By 2015, we forecast Saudi petrochemical production will expand by 32% from 2009 levels of 53.2 mntpa to reach 70.2 mntpa, accounting for 9.2% of global supply. The capacities of ethylene and polyethylene are forecast to grow by 45.6% and 11.2%, respectively, to reach 17.38 mntpa and 5.45 mntpa by 2015. Meanwhile, the capacities of propylene and polypropylene are expected to expand by 44.6% and 118.7%, respectively, to reach 5.09 mntpa and 7.92 mntpa by 2015. Although there are no plans to increase the methanol capacity of 5.36 mntpa, investments have been made to diversify into its derivatives. There are currently 62 projects ongoing in the Saudi petrochemical sector valued at roughly SAR236 billion (USD63 billion). The highest value and volume of forecasted petrochemical contract awards is in 2011 at SAR124 billion (USD33 billion) and 23 projects; implying faster industry growth and project development post 2014. Projects are funded through a variety of debt and equity combinations; including loans from domestic and international banks, the Saudi Industrial Development Fund (SIDF) and Public Investment Fund (PIF), export credit agencies as well as sukuks. The sector is likely to face a few challenges in the medium term: (1) shortage of skilled labor force; (2) scarcity of ethane; (3) sustainability of demand recovery in the Chinese market; and (4) anti-dumping duties. However, the benefits of the Kingdom’s sustained expansion and diversification of its petrochemical output far outweighs the industry’s challenges.

com Introduction Saudi Arabia is becoming a leader in the petrochemical industry. aromatics such as benzene. but are not limited to. accounting for roughly 40% of basic chemicals global capacity. and polystyrene (PS). An analysis of the Saudi petrochemical industry and its long term role towards the economic diversification of the Kingdom is included in this report. Olefins such as ethylene. On average.   Process  Natural Gas  Processing  Feedstock Methane Ethane Propane Crude Oil  Stabilization  Butane Condensate Naphtha  Oil Refining  Gasoil . However. Despite being an NGL. while tight credit conditions led to a number of project delays. as well as address a number of ongoing projects. and include ethanol. They are synthetic fibers that are light. We will examine the key value chain markets in which domestic producers cater to. isobutene. that is their long chain of hydrocarbon molecules is broken down to produce a small number of basic commodity chemicals. Saudi petrochemical producers were not immune to the global downturn of 2008. Olefins and aromatics are the building blocks of petrochemical intermediaries. toluene and xylene are produced by catalytically reforming naptha. strong. the crisis showed the growing dominance of Saudi producers in the industry as their margins allowed them to ride out this period of weakness relatively comfortably. All in all. The final liquid feedstock is naphtha. The downstream chemical products and their chemical processes include. methanol and methyl tertiary butyl ether (MTBE). only 5% of oil and gas products are used in the production of petrochemicals. The mismatch between Chart 1: Production of Feedstocks supply and demand for refined products leads to surpluses of some hydrocarbons. Oxygenates: are chemical compounds that have been combined or infused with oxygen. These feedstocks are then cracked to produce primary petrochemicals. thereby rendering them useful in plastics and rubber industries. The Kingdom holds a considerable market share of supply for basic petrochemicals and their intermediaries. A major product is nylon. Meanwhile. and weather-resistant and are therefore used to make textiles. the following: Polymers: are natural and synthetic compounds made up of chains or rings of linked.2 www. derived directly from crude oil. Natural gas liquids (NGLs) are higher hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption. These surpluses are the raw materials or “feedstocks” for the petrochemical industry (Chart 1). ethane is in fact a gas that can also be extracted from associated gas. The collapse in global demand for petrochemicals impacted profitability. albeit with concerns over a few challenges to be faced in the medium term. butane. Polymers’ high molecular weight accounts for their high melting and boiling points. strong infrastructure. The principal component of natural gas is methane. as well as more complicated derivative products (Chart 2). the simplest aliphatic hydrocarbon used as a fuel feedstock. low energy costs and a supportive government policy continue to encourage large inflows of investment into the sector. Polyesters: is a category of polymers that contain the ester functional group in their main chain (esters are chemical compounds formed by condensing an acid with an alcohol). What are Petrochemicals? The petrochemical industry lies downstream of the oil and gas industry. condensation. which is derived from benzene. polyvinyl chloride (PVC). polypropylene (PP). the recovery of global olefin and derivative consumption in 2010 saw the expansion of domestic production and the return of precrisis profit levels. Meanwhile. At the same time. Crude oil and natural gas are extracted from the earth and shipped to refineries for processing to produce hydrocarbons. Generally NGLs consist of ethane. They mainly consist of alcohols and ethers. propane and natural gasoline.alahli. The most important basic petrochemical is ethylene. Thus. Its substantial reserves of cheaply extractable feedstock give domestic producers a cost advantage over their global competitors. or other methods in gas processing or cycling plants. propylene and butadiene are produced by steam cracking NGLs. Major products include polyethylene (PE). a bright future for the sector will be illustrated. which is a byproduct of the crude oil production process. simple monomers.

It is undeniable that petrochemical derivatives have a vast range of uses in the economy. including textiles and soaps. The safety and comfort of automotive transportation has been possible through the presence of plastics. The Kingdom’s competitive cash point position serves as an incentive for foreign petrochemical companies to invest in the industry. a downstream product formed when naphtha is placed into a reformer (an apparatus that reforms the molecular structure of hydrocarbons to produce richer fuel).  Propylene)  Polymers  (LDPE. PTA. (3) product quality specifications. PP)  Meanwhile.  Propylene)  Methanol  ( Intermediates: are compounds produced during the conversion of some reactant to a product. triethylene glycol (TEG). ACN. and have been brought down further to 6. (2) political influences. globally.  Ethylene Glycol)  Polymers  Naphtha  (Benzene. These are used in the manufacture of antifreeze. The most prominent advantage is the Kingdom’s substantial reserves of cheaply extractable feedstock. PVC)  Methanol  Intermediates  (Ethylene.75 a mnbtu through state-owned oil giant.  Styrene)  Methanol (Polystyrene. while its accession to the WTO in 2005 has eased market entry.S. and (5) supply and demand imbalances. the more liquid the market is and therefore the more reliable the prices are. West European naphtha prices have averaged USD10 per ton lower than in the U. Saudi Aramco. (4) environmental legistlation. the price of ethane varies entirely with location.3 www. the relative feedstock cost advantage rises. Chemical intermediates include caustic soda. petrochemical prices in general are not very transparent. the petrochemical industry takes the residuals of the oil and gas industry and turns them into useful products that sustain and enhance life. In the U. AB  PET. However. Xylenes)  Methanol  (Phenol. Saudi Arabia has opened its market by lowering import tariffs: PE. Chart 3: Downstream of Ethane Associated Gas  Resins  Fibers  Plastics  Elastomers  Solvents  Coatings    Polymers  End Uses  Feed stocks  Basic  Petrochemicals  Intermediates  Petrochemical Prices and Applications Feedstock prices vary according to their drivers. paints and polyester. The government offers ethane-rich associated gas to domestic producers at a subsidized rate of USD0. The price of refined products varies throughout the world due to (1) differences in market structure.S. ethylene oxide and vinyl acetate monomer (VAM). On the other hand. while natural gas reserves amount to 279.alahli. phenols. Crude oil prices set the cost of refinery operation. while in Saudi Arabia it is set by a Royal decree at the cost of extraction. The larger a congregation of buyers and sellers. Polyethylene Ethylene Glycol  Styrene Ethane Steam Cracker  Ethylene Vinyl Chloride Alpha Olefins Natural Gas Others Fuel  As the price of oil increases.. diethylene glycol (DEG). The Saudi Petrochemical Sector The Saudi Arabian petrochemical industry is the most attractive in the Middle East. as well as the bottom end of the naphtha price band. The top end is set by premium gasoline prices. However. Thus. The regional differences of a particular product are once again attributed to differing freight costs. detergents. Saudi Arabia was able to maintain its feedstock pricing Chart 4: Downstream of Propane Ethylene  Associated Gas  Steam Cracker  Fuel  Ethylene  Derivatives  Propylene  Propane  Dehydrogenation  Polypropylene Oxo‐alcohols  Propylene Oxide  Cumene/Phenol  Natural Gas  Propane  Iso Propanol  Acrylic Acid  Ammoxidation  Acrylonitrile  Acrylonitrile  Oil Refinery Cyclar  Aromatics  . water conservation and hygiene has improved dramatically due to plastic water pipes and bottles. Crude oil reserves amount to 264 billion barrels – the world’s largest reserve base -. linear alkyl benzene (LAB). and purified terephthalic acid (PTA).5% at the end of 2010.7 trillion cubic feet. ethane is linked to the market price of natural gas as well as extraction costs. promising a long-term path towards economic diversification. fibers and elastomers. Unfortunately. in the WTO agreement. The regional differences in naphtha prices are the result of differing freight costs when the raw material is exported. producers procure this commodity at spot market prices that currently stand at USD5 a mnbtu. For example. Chart 2: Petrochemical Industry   Methane  Ethane  LPG  Gas Oil  Methanol  (Ethylene. Fiber intermediates include monoethylene glycol (MEG). PP and PS tariffs were reduced to 8% from 12% in 2008. This is due to the strategic advantages Saudi producers enjoy compared with their global competitors. These have a wide range of derivatives.

Although Sabic attributed the result to the declining petrochemicals and plastics markets. arguing that because these liquids are used for domestic purposes and require no investment in export terminals or marketing. Moving further down the product chain into intermediates and derivatives generates far more employment opportunities. .alahli. projects were initially being delayed due to slowing demand. The downturn of the construction sector during the crisis freed up resources and gave the petrochemical industry more negotiating leverage over the costs of planned projects. basic olefins. value addition and Saudiasation of the work force. producers’ feedstock advantage and proximity to Asian markets provided a floor to their earnings. to plummet by 20% in 2009. A scarcity of raw materials. such as ethylene. as the additional capacity is intended for exports. The resulting price trough will demonstrate the growing dominance of Middle East producers as their margins will allow them to ride out this period of weakness relatively comfortably. expected to come onstream post comparative advantage by indicating that ethane is a natural resource that is not being exported.5% Y/Y drop in net profits. undermining the feedstock advantage of ethane-fed crackers in the Kingdom. Saudiasation also poses a challenge due to the shortage of necessary skills needed to cater to the growing demands of the sector. Diversification into the downstream sector requires a great deal of capital. while its supportive government provides some of the lowest taxes and property registration costs. The bulk is targeting the ethylene chain. It will take time for the market to absorb this new capacity and reach a new pricing equilibrium. and engineering expertise was leading to project schedule slippages.000 nationals. The global slowdown may create a supply glut with large scale capacity expansions in 2009 and 2010 from the Middle East and Asia. compelling Saudi investors to seek JVs with foreign firms. and petrochemical prices are likely to come under pressure from extra supply. with an additional 15 mntpa capacity expected to come onstream in the Middle East by 2012. Saudi petrochemical producers were not immune to the global downturn. Sharp declines in the price of oil towards the end of 2008 and into 2009 gave naphtha-fed crackers outside the gulf a boost in competitiveness. However. The Saudi Arabia General Investment Authority (SAGIA) strongly encourages greater captive use of olefins in petrochemical mega-complexes in order to increase the exportable value of petrochemical projects and boost local employment. they can be sold to domestic customers at a discount on export prices. a key benchmark.142 million in 4Q 07. The drawback of ethane is that it only yields a small and low-value slate of products. Naphtha receives an 11% discount on its export price and NGLs garner a 30% discount on the export price of naphtha. conditions on investment have been imposed and are enforced through ethane allocations. which had rapidly accelerated from 2002 to 2008 amid the construction boom in the Kingdom. and remained largely flat in 2009. Meanwhile. After bottoming out at SAR557 million in 1Q 09. this was mainly due to Sabic’s 95. This caused the price of polymers – particularly polyethylene – in Asian markets. down from SAR8. Thus. This will allow domestic producers to offer competitive prices to tariffprotected markets – such as the EU. ChevronPhilips. high-cost producers in other parts of the world will be squeezed out. The Kingdom’s lucrative crude oil reserves allow for the world’s lowest project energy costs. Unfortunately. The Effect of the Economic Crisis Demand for petrochemicals and their derivatives generally track global economic trends given their extensive use in everyday applications. Overall. representing 6. global demand for olefins fell 3-4% in 2008. Thus. Despite the government’s commitment to reform. the sharp drop was probably related to a goodwill writedown on the company's 11 billion-dollar 2007 acquisition of the US firm GE Plastics.6% of the total labor force. However. These comparative and policy drivers are encouraging the inflow of capital. there are a number of disadvantages to this conditional approach on investment. Currently the petrochemical sector employs just over 43. and Japan – and lead to sizable increases in Saudi petrochemical exports. The slowdown also reduced the earnings of domestic producers with the collective net income of the sector falling to SAR273 million in 4Q 08. Large economies of scale and proximity to European and Asian markets have also encouraged foreign investment.4 www. restrictions of ethane allocations mean that state-owned companies receive higher priority. Another upside of the crisis for Saudi producers was the declining cost of petrochemical plant construction. labor. This may represent a challenge to Saudi Arabia. and Royal Dutch Shell.S. U.7 billion in 1H 09. in the medium term. The guidelines emphasize diversification. The situation was then exacerbated by destocking throughout all petrochemical product chains.4% of the Saudi workforce and only 0. For example. three international oil companies with major Saudi Arabian petrochemical presence are ExxonMobil. Saudi firms together reported net income of SAR8 billion in 2H 09 compared to the net income of SAR0. particularly for polymers. The argument was also extended to naphtha and other liquids.

Meanwhile.2 Iran Bahrain Kuwait Oman UAE Qatar Saudi Arabia Source: GPCA. catering mainly to downstream producers.4 2009 1. This positive trend is set to continue in the short-term as increased production capacity comes onstream.alahli.7 million tonnes of total petrochemical capacity in 2009 (Chart 5). they are unlikely to maintain their upward momentum.8 15. The expansion and further specialization of domestic production will continue to diminish the percentage of imports. with total level rising by 56. the export volume rose to 27. Saudi Arabia’s ethylene capacity at the start of 2010 was 11.48 billion by the end of 2011.67 billion. versus the USD380 per tonne faced by producers using naphtha-fed crackers (Chart 7). to reach Market Size and Trends Saudi Arabia currently accounts for 7% of global supply of basic and intermediary products. an 11.3 11. By 2015. largely attributed to the dominant share of derivatives. slightly below its 2007 level.94% of global capacity. supplying over 100 countries.2% of global supply (Chart 5).8 3.2 28. Roughly 4. the recovery of oil prices also ensured a significant growth in export value.38 mntpa by the end of 2015. Chart 6: Applications of Ethylene 40. (1) Ethylene Ethylene is an olefin produced by steam cracking ethane and naphtha. Thus.14% rise Y/Y. Although 2011 petrochemical prices will remain above initial estimates.4 2015 7. However.34 billion.75 million tonnes came onstream in 2009 alone. joint ventures between Saudi Aramco/Total and Saudi Aramaco/Dow Chimical will increase this total to 17. accelerates.31% to 31.57 million tonnes.5 www. In 2009. Meanwhile.31 million tonnes valued at SAR41. the value of petrochemical exports is forecast to reach SAR99. accounting for 9. mainly polyethylene and ethylene oxide (Chart 6).78% and 3.2 mntpa. The Kingdom has gone from being a net importer to a leading net exporter in the petrochemical sector. mntpa barrel. the sector’s import volume and value fell by 1. This large percentage is due to the significantly lower share of the cost of raw materials per unit faced by Saudi producers. Recent political turmoil in the MENA region has boosted oil prices. The global landscape of the industry is set to radically change over the next 5 years as demand and supply shift eastwards. Global olefin and derivative consumption is forecast to have recovered in 2010 as demand from Asia.1% by 2015 (Table 1). The discounted price of ethane results in the ethylene production cost of ethane-fed Saudi plants to average USD160 per tonne. the dramatic fall of prices across the petrochemical spectrum during the crisis caused the value of exports to fall by 14.1 8. and 50% of GCC’s 105.58 mntpa by 2012.75% to USD95 per LLDPE 16% LDPE 16% Ethylene Oxide 15% Ethylene Dichloride 12% HDPE 28% Others 6% Source: NCB Estimates Ethyl Benzene 7% Capital Expenditure from Saudi firms accounts for almost 50% of the USD250 billion committed to petrochemical projects in the Middle East. we forecast Saudi petrochemical production will expand by 32% to reach 70. The Kingdom is set to emerge as a global hub of ethylene and its derivatives given the capacity additions that are expected to become operational from 2012 onwards. allowing Saudi producers to enjoy stronger first quarter earnings.94% settling at SAR52. Domestic export volumes increased by 13.94 mntpa.4 5. The buoyant energy market has subsequently pushed up petrochemical prices.4 1.1 4. Based on the monthly averages of 1H 2011. Petrochemical imports represent a smaller share of the market. Chart 5: Gulf Petrochemical Capacities.4 9. respectively.7 70.4 53.22 billion.60%.1% to reach 14.34% to reach SAR82. the Kingdom’s contribution to global ethylene capacity is expected to rise to 11. NCB Estimates In 2009. Investments made by Saudi Kayan and National Chevron Philips are forecast to expand domestic ethylene capacity by 22. Our estimate for the average 2011 price of Arab Crude Light has risen by 18. .24 million tonnes. particularly China and India. It is an important feedstock for various petrochemical derivatives. representing 8.

59 7.6%.82% of global capacity (Table 1).62 2010 13.7% during 2003 – 2008.41 4. From 2012 onwards. (2) Polyethylene Polyethylene is a flexible.55 mntpa.12 2011 14. accounting for roughly 4. The majority of ethylene production is based on naphtha or ethane procured at spot market prices.58 5.58 5. Aggressive capital expenditure over the coming 5 years will increase domestic capacity of HDPE.52 2013 14. As oil prices are forecast to rise in 2011 to average USD95 a barrel.58 5.50 1.75 3.45 2.90 1. and LLDPE at 0. Also. and its higher crystallinity (the degree to which the compound is a crystalline) makes the compound relatively more rigid. Estimates show that demand remained muted in 2010 on the back of slow recovery and weak consumption in developed countries.52 3.59 7. This growth may subdue in the long-run as oversupply begins to weigh heavily on the Kingdom’s price competitiveness (Chart 9).6 www. Saudi Arabia’s current polyethylene capacity is 4.35 2. However. respectively. The Middle East emerged as the leader of ethylene consumption growth. together accounting for 62% of global consumption in 2008.88 5.35 2. However.10 1.00 4. foils and protective coating on textiles.59 7.75 4. Thus. HDPE is used for water pipes and detergent bottles.45 2.00 5.3%.35 2.320 per tonne. LDPE and LLDPE by 113. with a CAGR of 7. LLDPE is steadily eroding the LDPE market share as it allows lower thickness films that can reduce costs for many applications while retaining a higher tensile strength.10 1.45 Chart 7: Global Feedstock Plant Costs 120% 100% 80% 60% 40% 20% 0% South Korea China (N/E) NW Europe NW Europe US Gulf US Gulf W. Company Announcements .55 0. MEED Projects. accounting for 26% and 25% of the 111 mntpa consumed in 2008.92 2015 17. films and sheets.4% and 33. Demand for the olefin slumped in during the crisis.59 7.90 1.alahli. The ethylene derivative has three forms: high density polyethylene (HDPE).52 Others 14% Source: NCB Estimates (Chart 8).15 7.45 2. However.90 mntpa and has the following breakdown: HDPE at 1. Sluggish demand and new capacity additions is likely to restrict the global utilization rates in the medium term. LDPE at 1. North-East Asia and Western Europe are the largest consumers of polyethylene.45 2. North America and North-East Asia remain the largest consumers of ethylene.00 4.1 mntpa.38 5.45 mntpa.00 4.75 mntpa. and only slightly rebounded in the 2H 09. North America. low density polyethylene (LDPE).35 2.10 1. 35. This can be clearly demonstrated 2012 14. given the wide range of products its derivatives find application in: paints.94 4.10 1. ethylene is expected to rise to USD1. HDPE has a higher density and melting point than the other two forms.10 1.92 Source: NCB Estimates. falling 28.8% Y/Y.55 0.52 2014 15. and linear low density polyethylene (LLDPE). the Kingdom’s polyethylene capacity will settle at 5. thus oil prices largely govern the olefin’s price movement.Canada (N/E) inland (N) coastal (Na) Coast (E/P) Coast (NG) (N) KSA (E) KSA (P) Fixed costs Utilities Raw materials Chart 8: Applications of Polyethylene Injection moldings 13% Blow molding 12% Piping applications 7% Films & sheets 51% Painting materials 3% Source: MEED Ethylene demand closely tracks economic cycles. Ethylene prices averaged USD832 per tonne in 2009. Saudi Arabia is expected to continue operating higher rates than its Western and European counterparts given its proximity to the North-East Asian market. while LDPE and LLDPE are used for plastic bags. pipes.00 4.10 1. mntpa 2009 Ethylene Polyethylene HDPE LDPE LLDPE Propylene Polypropylene 11.35 2.09 7. durable and chemically inert compound that finds applications in films and packaging Table 1: Saudi Basic Petrochemical Capacities. once again the Middle East was leading in terms of consumption growth.

the compound finds applications in blow and injection molding.5% between 2003-2008. A greater shift in demand towards the East will be witnessed in coming years.2008 in the region.510 per tonne and is expected to grow at a CAGR of 4. it keeps production costs below that of global peers. (4) Methanol Methanol is a colorless. The Kingdom’s capacity growth of PP tracks that of propylene. acetic acid. with 4. polyethylene will continue to track ethylene prices with HDPE and LDPE expected to grow at a CAGR of 2. the growth will be at a slower pace than witnessed historically given the anticipated slow recovery and demand weakness of developed countries. The Kingdom’s propylene capacity currently stands at 3. during 2009-2015. Demand for propylene and its derivatives are largely driven by North America.7 www.3%. Sabic is the world’s second largest producer of methonal. toxic liquid alcohol used in diverse applications. propylene prices peaked in 2008 at USD1. By the end of 2015. restricting the detrimental effect slow recovery in developed countries will have on demand. Roughly 67% of propylene is used to produce its derivative polypropylene (PP). fuel and general solvents.880 per tonne (Chart 9). the advantage is less lucrative than that of ethylene.6% and 3. LDPE and LLDPE have risen between 44-77% since the start of 2009.200 1. as well as fiber manufacturing (Chart 10). As such. Consumption growth in the Middle East outpaced all other geographies.9% during 2009-2015.alahli.600 1. PP will track propylene price and is currently at USD1.52 mntpa. North-East Asia and Western Europe. Saudi Arabia’s current methanol capacity is 5.8% was reported between 2003 . 7% 4Q‐10 2Q‐11 4Q‐11 2Q‐12 4Q‐12 2Q‐13 4Q‐13 2Q‐14 4Q‐14 2Q‐15 4Q‐15 Acrylic Acid. 14% Source: Bloomberg. Although we expect global consumption of polyethylene to continue rising in the medium-term. Key projects being undertaken include those being developed by Sahara Petrochemical and Saudi Aramco. (3) Propylene & Polypropylene Propylene is another commonly used olefin with a higher density and boiling point than ethylene due to its great size.748 per tonne.7% to reach 7. representing roughly 7. Moving forward.000 1. where a CAGR of 13. Saudi Arabia’s contribution is expected to rise given the growing number of propylene projects being announced. and is therefore used in producing a wide array of home appliances and automotive parts. reporting a CAGR of 11. Currently. The prices of HDPE. 8% Acry Nitrile. This is due to the rising oil and ethylene Chart 9: Price of Ethylene.36 mntpa. accounting for a projected 10. The liquid is primarily used as a feedstock in the production of derivatives. NCB Estimates Source: NCB Estimates in the HDPE market. 4% Others. pricing has recovered to USD1. respectively.8% of global capacity. The compound has a higher boiling point than the polyethylene derivative. 1.000 800 600 400 200 0 4Q‐04 2Q‐05 4Q‐05 2Q‐06 4Q‐06 2Q‐07 4Q‐07 2Q‐08 4Q‐08 2Q‐09 4Q‐09 2Q‐10 Propylene Ethylene Polypropylene Polyethylene Chart 10: Applications of Propylene PP. thereby accounting for 4. This is because domestic producers are also able to procure propane (the feedstock of propylene) at a discounted rate to the naphtha export price.02% of global capacity. compared with the 3. Recessionary pressures pushed prices down in 2008 and into 2009.92 mntpa. including formaldehyde. albeit at a faster pace: by 2015 capacity will increase by 118.57 mntpa of propylene capacity will be added in the Kingdom (Table 1). In the coming years. Propylene and their Derivatives USD/t 2.800 1. such as an antifreeze.54% of global capacity. 67% Propylene Oxide. and dimethyl ether (Chart 11).123 Chart 11: Downstream of Methane Fertilizers  Acrylonitrile  Isocyanates Urea  Melamine Ammonia Natural Gas  Methane Synthesis  Methanol Formaldehyde  Acetic Acid  DMT  MMA Fuel Fuels  .5% observed in North-East Asia.400 1. Furthermore. Although.

This indicates that although capacity expansions are already being undertaken. prices are expect to have risen to USD330 per tonne in 2010. Roughly 21% of the sector’s projects value is in the execution phase. a new wave of low-cost methanol production across the Middle East and Asia will result in softer prices over the medium term. Study.47% Y/Y.0% 16.1% 12. falling 37. is the market leader in the Saudi petrochemical industry and currently ranks among the world’s top six producers. Sipchem is predominately focused on methanol producing 1 mntpa.alahli.0% Source: MEED Projects . Procurement.1% 14. while Sabic tries to offer a broad range of petrochemical products. However. leading to dramatic increases in inventory. Phase 2 has an operating structure that permits 50% of acetic acid produced to be used as a feedstock for the production of VAM.0% Planned Study FEED EPC (BID) EPC (PQ) Execution On Hold 4. As new derivative demand options offer a positive demand outlook. particularly China’s need for fuel and methanol across the core derivative slate. at SAR124 billion (USD33 billion) and 23 projects (Chart 13).7% 9. A project is defined as Chart 12: Share by Petrochemical Project Status 35. Sabic’s cost advantage and superior economics gave it a relatively well position to survive the difficult market conditions of the global petrochemical sector. Construction). and 18% of projects currently undergo bidding. projects in the study phase represent a significantly higher 33% (Chart 12). where actual construction commences and extends for 2 to 3 years. with privately-held Al Kayan Petrochemical company (Al Kayan). growing at a CAGR of 9. and strong free cash flow generation. EPC Bid (Engineering. This surge in global demand will be driven by Asia.0% 21. thereby becoming one of its lowest-cost suppliers in the world.3% 10.0 5 0.6% 12. Chart 13: Value and Volume of Forecasted Contract Awards Budget Value (USD bn) 40.8% 8.1% 15.5%.0 20 15 20. SAR50 billion in equity on hand. bottoming out at the start of 2Q 2009.2% 20.4% between 2009-2014.0% 5. Projects On Hold also represent a significant share at 14. Sipchem is investing in the expansion of its Jubail Petrochemical Complex to diversify into methanol derivatives and move up the value chain. Construction).9% 16. However. Sabic formed a joint venture. FEED (Front End Engineering and Design). larger industry growth and project development will be onstream post 2015. Projects with the following statuses are classified as current: Planned. On Hold and Retender. In the past. The value and volume of forecasted petrochemical contract awards are significantly higher in 2012 than in previous years.8 www. Global demand for methanol slowed in 2008. thereby asserting that the Kingdom will not only ride out the environment of overcapacity in the medium term but also become the primary centre of global production over the long-term. Demand is estimated to have decreased at an annualized rate of roughly 37 million tonne. This ensures an inhouse supply of feedstock at cost price. However.0% 30. Execution.0% 0. The project will consist of an ethylene cracker Share of Value Share of Volume 29.0% 11. Procurement.5% 32. with the new facility producing carbon monoxide (0. Prices averaged USD232 per tonne in 2009.7% 5. These capacity additions will become operational from 2015 onwards. known as Saudi mntpa on-stream.3 mntpa) and acetic acid (0. Sabic remains one of the region’s most creditworthy companies. The Phase 2 expansion was completed in late 2009. The poor demand of late 2008 also brought about a sharp decline in methanol prices. Moreover.0 0 2009 2010 2011 2012 2013 At the time of writing this report. This relatively high number is due to logistical issues rather than shortage of funding sources. Current Petrochemical Projects current if it is tangible and will materialize in 3 years. established in 1976.345 mntpa). the value of the 62 current petrochemical projects in the Kingdom exceeds SAR236 billion (USD63 billion). Demand is expected to recover in the medium term.0% 25.9% Source: MEED Projects Petrochemical Leaders and Financing Structures Sabic. vinyl acetate monomer (VAM) (0.46 mntpa).0 10 10.1% 5. EPC PQ (Engineering. With 70% government ownership.0 Volume Budget Value (USD bn) Volume 25 30. Although no further projects are expected to be undertaken to increase domestic capacity of methanol.

Saudi British Bank. direct export credit agency loans (USD490 million).090 million). which will be ChevronPhillips' third in Jubail. commercial facility provided by international banks (USD1. ultra-low sulfur refined products.1 mntpa of hexane-1. to strengthen their global position. Furthermore.165 mntpa of ethylene.120 million). The facility will comprise an ethane/propane cracker providing feedstock for the production of a vinyl acetate monomer (0. 0. Financial closure was achieved by means of equity including IPO (USD3. SATORP’S export refinery will also provide the feedstock for the new Jubail Petrochemical Complex.5 billion (USD10 billion) and is being financed by a mix of debt & equity in the ratio of 62:38. The project will be financed through 70:30 debt-equity ratio. Arabian ChevronPhillips Petrochemical Company and public shareholders.3).and will produce 8 mntpa of petrochemicals and gasoline products.000 barrel a day. The full conversion refinery will maximize the production of diesel and jet fuels. The project is valued at approximately SAR37. including utilities such as power and water. The project financing was arranged in a mix of debt & equity in the ratio 53:47. where the integrated complex was to produce an extensive and diversified slate of plastics and petrochemicals. polyvinyl butyrate (0. The proposed refinery will be designed to process Arabian Heavy Crude and produce high-quality. Other Sabic affliates are increasing the production of polyolefins and polymers in the Kingdom.599 million).300 million). the shift in location will allow Sadara to save up to 40% in costs as the Royal Commission for Jubail and Yanbu (RCJ&Y) will provide the basic infrastructure needed for the complex. which has capacities of 1. The project is one of two new facilities that will substantially increase the Kingdom’s supply of . export credit debt (USD590 million) and government loan (USD1. National ChevronPhillips Company (NCP) is a joint venture between Saudi Industrial Investment Group (SIIG). but with the complex located in Jubail.3 mntpa) unit. owned and operated by Sadara Chemical Company.998 million). as well as 15 downstream chemical production plants. The joint venture of Saudi Aramco and Sumitomo Chemical has opened up the bidding to Phase II of its Petro-Rabigh refinery and petrochemicals complex. Al Rajhi Bank.3). A. The company plans to build a largescale petrochemicals complex at Jubail. The project is valued at USD15. Phase III of the project is currently in execution. and a bridging loan from the sponsors (USD955 million).alahli. full conversion refinery in Yanbu.015 mntpa) (Appendix A. This joint venture between Saudi Aramco and Dow Chemical Company was originally to be located in Ras Tanura. will produce 1.2. as well as produce paraxylene (0. A. which will be used wholly or partially to make polyvinyl acetate (0. Saudi International Petrochemical Company (Sipchem) is a similar major project.2 mntpa of polystyrene and styrene (Appendix A. The Kayan project is part of Sabic’s plan to raise the proportion of specialty chemicals to 30% of total sales by 2020.700 million).000 million) and government loan (USD1. Financial closure was achieved by means of equity (USD1. 0. with roughly 40% of the engineering work complete.633 million).4 mntpa of propylene. benzene (0. processing Arab Heavy crude and fulfilling stringent product specifications for environmentally friendly fuels. A.rather than the gas and petroleum mix initially planned for .04 mntpa).9 www.870 million).2. 0. For example.3). and has obtained a USD533 million Islamic working capital facility from five regional banks (Riyad Bank. The project entails the expansion of the existing ethane cracker and araomatics complex. HDPE. Saudi producers must aggressively invest in diversifying their product portfolio. term bank loan ( and units producing ethylene glycol. 0.7 mntpa). 1.14 mntpa) and polymer grade propylene (0. Bank Al Jazira and Arab Investment Company).125 mntpa).2. LDPE and PP. Financial closure on the USD2.4). Integration allows for improved risk management. term loan (USD727 million). The complex will be now fed entirely by ethane gas .000 million and is set to be completed by 3Q 2014. the reprocessing of off-gas streams and greater feedstock flexibility. Commitments were received from the Public Investment Fund (USD1. the Yanbu National Petrochemical Company (Yansab) has begun commercial operations at its Yanbu petrochemical complex. The refinery will be one of the most advanced in the world. The project was funded by means of term loan (USD1.3 mntpa of ethylene. 0.500 million project was achieved in mid-2010.4 mntpa polypropylene (PP). local bank facility (USD2. Issues related to the site forced the project to be relocated and reduce the scope of production. Saudi Aramco and Total are planning a Saudi Aramco Total Refinery and Petrochemical Company (SATORP) at Jubail Industrial City 2.5 mntpa of polyethylene (Appendix A. and a refinery establishes the platform to do so. Islamic loan (USD1. Fortunately. export credit debt (USD700 million) and government loan (USD1.000 million project is excepted to be reached by early 2013. Financial closure for the USD8. and 0.015 mntpa) and ethylvinyl alcohol (0.676 million).485 million).4 mntpa of propylene. polyvinyl alcohol (0.2 mntpa) (Appendix A. The increasing scarcity of ethane has encouraged the integration of refining and petrochemical plants in Saudi Arabia. Saudi Aramco has also aligned with China Petroleum & Chemical Corporation (Sinopec) to develop a 400.1 mntpa polyethylene (PE). export credit debt (USD2. The project.067 million).

Another feedstock solution would be to increase the production of non-associated gas. Arabiyah and Hasbah. will not be remedied overnight. Although the future of the Saudi petrochemical sector is bright. This will open up acquisition opportunities for Saudi producers. Saudi Aramco is also forging ahead with the development of two other offshore non-associated gas fields. it does not have access to markets of specialized products. distributors in the mature markets of Asia. the Kingdom’s domestic sale price of USD0. domestic gas prices will still lie below their global competitors.6% of the total labor force. (3) sustainability of demand recovery in the Chinese market. and involves more manpower (Chart 14).com petroleum products to the international market. Saudi Aramco has allocated the totality of its ethane reserves and is currently making concerted efforts to bring more gas online. a burden facing the industry is the rising price of exploration and production for non-associated gas.75 per mnBTU is expected to come under review in the medium term.000 million dollar project has been stalled since the departure of ConocoPhilips. Thus. which has been growing at 7% annually in recent years. However. distribution channels will become imperative. Chart 14: Downstream of Naphtha   Ethylene  Propylene  Butadiene  Natural Gas  Steam Cracker  Butylenes  Benzene  Condensate  Fuels  Styrene  Cumene  Nitrobenzene  Cyclohexan LAB  TDI  Para‐xylene Ortho‐Xylene  Meta‐Xylene  PTA  DMT  PAN  IPA  Ethylene Derivatives  Propylene Derivatives Styrene Butadiene Rubbers SB Latex  Butadiene Rubber Acrylonitrile Butadiene Styrene HMDA  Others  The second and most important challenge of the sector is the scarcity of ethane. and (4) antidumping duties. Saudi Aramco is currently developing Karan. With no guarantee of finding additional sources. in the long-term a more sophisticated feedstock mix involving both ethane and liquids will be required to encourage further foreign investment. the following challenges are expected in the medium term: (1) shortage of skilled labor force. The hydrocarbon is derived from crude oil and is therefore in abundance in the Kingdom. At this point. downstream production requires skilled technical and craft personnel. However. and may constrain profit growth. Europe and the U. Petrochemical Market Outlook and Future Challenges The Saudi Petrochemical sector will continue to hold a considerable market share of product categories that lie not too far downstream of its pronounced feedstock advantage. Saudi Arabia is raising gas production from non-associated gas fields to cater for rising domestic demand. Thus. However. whose production opens up a broader range of aromatics and intermediates. low cost feedstock. This will create a long-term constraint on Saudi Arabia’s capacity rollout and hinder its goal of creating sustainable job opportunities for Saudi nationals. Producers’ low cost margins and recent profit growth will allow them to stay afloat during the supply glut and squeeze out higher-cost producers in Europe and North America. The recent surge in petrochemical prices and subsequent growth of domestic producers’ profits will offset the higher cost of naphtha in the short term. However. flowing at 1. Despite this impending rise.10 www. The third challenge to producers is the sustainability of recovery in the Chinese market.alahli. policy makers are turning to liquid fuels. Hydrocarbons extraction and basic petrochemical production is heavily capital-intensive and is able to provide employment to only 0. Consequently. particularly in petrochemicals. (2) scarcity of ethane and rising feedstock prices. The project is valued at USD3. This is why the trend towards refinery and petrochemical plant integration is on the rise. Naphtha is a more versatile feedstock. the feedstock is higher in cost than the traditional heavily subsidized ethane. the additional labor costs and expensive maintenance of naphtha fed crackers make the rate of return on its products lower than those of ethane-based products. as well as the additional processing units needed to reduce the high-sulphur count of the nonassociated gas fields. financing for the USD10.S. will become more attractive opportunities for acquisition. and will require the import of expatriate workers. The mounting costs are due to increases in the global demand on offshore oil riggers and seismic survey companies.8 billion standard cubic feet per day (cf/d) of gas. utilities and a strong infrastructure. the original international party involved in the joint venture. China is Saudi Arabia’s Naphtha   Benzene  Catalytic  Reformer  Oil Refinery  Toluene  Xylenes  . Furthermore. Total production from the two fields is expected to rival with the Karan development. and encourage diversification into more sophisticated derivatives production. A key challenge is the need for a well trained and flexible labor force further down the product chain. However. The Kingdom’s shortage of skilled personnel. which is expected to produce 1. higher economies of scale and logistical advantages will continue to give Saudi Arabian producers a competitive advantage in the petrochemical market. Although the Kingdom possesses feedstock. its first offshore non-associated gas field project.8 billion cf/d.375 million and is expected to be completed in 2013.

The abundance of ethane-rich associated gas allowed the launch of a series of projects that are set to put the Kingdom as a global hub of ethyl- ene and its derivatives. China is now established as the world’s principle manufacturing location for low-cost plastic products due to its low cost labor force. 33%. Manufacturers affected by the duty include Saudi Yanbu Petrochemical Company.36 mntpa. Most importantly is the scarcity of ethane and the need to diversify into more versatile feedstock. domestic producers will be able to ride out the supply glut and be in a strong supply position when the market absorbs the new capacity and prices reach a new equilibrium.6% and 107. known as Saudi Kayan.50 per tonne. Acting on these claims. Arabian ChevronPhillips Petrochemical Company and public shareholders. are in the study phase indicating that greater capacity additions and industry development will be observed post 2015. Domestic producers are also able to procure propane at a discounted rate to the naphtha export price. Suppliers can also easily shift their exports to other Asian markets to avoid such losses. This notion is further enforced by the significantly higher volume and value of forecasted contract awards in 2012. the result of joint ventures.49 to USD323.52 mntpa by 2015. for the most part. but also encourage foreign investment. respectively. Financing of these projects.11 www. Trade representatives in Saudi argue that the Indian decision will not have a great financial impact on the Kingdom’s producers.7% and 11. The final challenge facing the sector is the accusation that Saudi producers exporting petrochemicals are earning high dumping margins on their products. was procured through a variety of debt and equity combinations. respectively to reach 5. to reach 16. The Saudi Petrochemical sector will continue to hold a considerable market share of ethylene and propylene product categories. The sector is also likely to face a few challenges in the medium term.08 mntpa and 5. Conclusion Global demand for olefins and polymers is forecast to have recovered in 2010 as consumption in China and India accelerated. producers’ close proximity to dominant Asian markets not only allows them to capture a greater share of demand.2%. The duty will hinder Saudi producers’ ability to expand sales in India’s lucrative petrochemicals market. leading a steady decline in its import demand.S. Projects by Sahara Petrochemical and Saudi Aramco will expand propylene and polypropylene capacities by 44. Nevertheless. National ChevronPhillips Company (NCP) is a joint venture between Saudi Industrial Investment Group (SIIG).09 mntpa and 7. The global market for basic petrochemicals is forecast to remain in oversupply in the medium term due to large capacity additions coming onstream by Middle Eastern and Asian producers. export credit agencies as well as sukuks. and petrochemical prices are likely to come under pressure from extra supply in the medium term. food grains. The recent surge in petrochemical prices .com largest importer of petrochemicals.45 mntpa by 2015. India recently imposed an anti-dumping duty on Saudi exports of polypropylene in a move to protect its own producers of the chemical. LDPE and PP. Fortunately. significant government support and large domestic market. These included loans from domestic and international banks. Saudi Arabian producers benefit from the lowest cost margins in the world and a supportive government determined to diversify its economy and expand its petrochemical sector. domestic producers may need to acquire the units and complexes of higher-cost producers squeezed out of the market in order to diversify into more sophisticated derivatives production. However. Although there are no plans to increase the methanol capacity of 5. There are currently 62 projects ongoing in the Saudi petrochemical sector valued at roughly SAR236 billion (USD63 billion). aimed at constructing a large-scale petrochemicals complex at Jubail. concerns over encouraged future dumping claims are being raised following the decisive move of the Indian government. Current projects in the sector are. 23 contracts amounting to SAR124 billion (USD 33 billion). However. thereby making propylene a commonly used olefin. Roughly 11. The tariff will be levied for a period of 5 years from the start of the provisional anti-dumping duty imposed on July 30 of last year.alahli. among others. Furthermore. Highcost producers in other parts of the world will be squeezed out. the Saudi Industrial Development Fund (SIDF) and Public Investment Fund (PIF). sugar and fertilizers. HDPE. The majority of projects.95 mntpa of ethylene capacity is forecast to come onstream in China over the next five years. where polypropylene is used to make finished goods and make woven sacks needed to carry cement.7%. Sabic formed a joint venture. as total petrochemical exports from Saudi Arabia to India amount to a modest USD200 million a year. Sipchem is investing in diversifying into its derivatives. and acts as a processing center for European and U. Thus. demand. and ranges from USD28. rising Chinese petrochemical capacities threaten to reduce its demand for foreign imports. Saudi Polyolefins Company and National Industrialization Company. with privately-held Al Kayan Petrochemical company (Al Kayan) to build an ethylene cracker and units producing ethylene glycol. such as naphtha. The capacities of ethylene and polyethylene are forecast to grow by 34.

Saudi Arabia is also raising gas production from non-associated gas fields to cater for the insufficient supply of gas. the significant cost advantages that Saudi producers are entitled to have ensured that project financing is of no issue. a more sophisticated feedstock mix of gas and liquids has begun to encourage the integration of refineries and petrochemical complexes. the increased cost of exploration and production of these fields will put upward pressure on the gas price of the Kingdom. as rising Chinese capacities threaten to reduce the volume of Saudi exports entering the market. . a bright future as a leading exporter lays ahead for the Saudi Petrochemical sector. However.alahli. Furthermore. The benefits of the Kingdom’s sustained expansion and diversification of its petrochemical output far outweighs the industry’s challenges. The second significant challenge for Saudi producers is the sustainability of recovery in the Chinese market. The final challenge. Furthermore. This has propelled countries like India to enforce antidumpting duties. is the legal accusations stating that domestic producers exporting petrochemicals are earning high dumping margins on their products.12 will enable Saudi producers’ to purchase the heavier feedstock without constraining profit growth. and act as another incentive for foreign investment. Thus. that is of less importance to the industry.

00 0.00 0.45 4.43 0.14 0.00 0.45 4.46 0.22 0.13 0.50 1.58 5.00 2014 15.92 0.82 5. mntpa Petrochemicals Ethylene Polyethylene Propylene Polypropylene Polystyrene HDPE LDPE LLDPE Methy Tertiary Butyl Ether (MTBE) Polyvinyl Chloride (PVC) Benzene Butadiene Styrene Methanol Vinyl Chloride Monomer (VCM) Ethylamines Vinyl Acetate Monomer (VAM) Ethylene Vinyl Acetate (EVA) Formaldehyde Epoxy Resins Carbon Monoxide Acetic Acide Polyvinyl Acetate Polyacetal 2009 11.52 3.33 0.1: Saudi Petrochemical Capacities.35 1.36 0.22 0.37 2.20 0.12 1.30 0.00 0.45 4.00 0.43 0.43 0.3 1.59 7.35 2.00 0.35 1.00 3.36 0.00 3.29 1.30 0.33 0.58 5.35 2.00 0.22 0.74 0.35 2.12 1.35 2.55 0.38 5.82 5.46 0.30 0.17 1.30 0.00 2013 14.35 1.12 1.43 0.42 0.42 0.42 0.45 4.58 5.30 0.10 1.33 0.35 2.3 1.36 0.33 0.35 1.30 0.59 7.478 1.36 0.10 1.82 5.37 2.42 0.33 0.5 Completion Onstream Onstream Onstream Onstream Onstream 3Q 10 3Q 11 3Q 14 4Q 15 .88 5.00 2010 13.alahli.33 0.65 0.22 0.37 2.10 1.00 3.00 3.00 Appendix Table A.00 3.12 1.43 0.65 0.33 0.00 0.46 0.29 1.54 0.00 0.09 7.12 1. MEED Projects.82 5.52 0.46 0.13 www.46 0.65 0.10 1.00 0.43 0.00 2012 14.2 1.25 1 1.13 0.37 2.05 Source: NCB Estimates.34 0.82 5.46 0.43 0.20 0.62 0.33 0.165 1.42 0.33 0.55 0.33 0.10 1.54 0.46 0.42 0.75 3.00 0.12 0.36 0.90 4.65 0.75 3.05 2015 17.59 7.82 5.27 1.00 0.33 0.33 0.92 0.14 0.185 1.45 5.22 0.2: Ethylene Projects in Saudi Arabia Announced Project Sabic Sharq (Eastern Petrochemical) PetroRabigh SEPC (Tasnee) Yansab Saudi Kayan National Chevron Phillips (SIIG) Sadara (Saudi Aramco/Dow Chemical) SATORP (Saudi Aramco/Total) Source: MEED Projects Capacity Addition.30 0.12 1.65 0.33 0.94 4.59 7.41 4.12 1.37 2.52 0.42 0.22 0.82 5.90 3.10 1.65 0.00 2011 14.36 0.15 7. mntpa 7.17 1.52 0.36 0. Company Announcements Table A.33 0.

00 0. mntpa 0.46 0.36 0.alahli.22 1.36 0.30 0.30 0. mntpa 2010 Methanol Vinyl Acetate Monomer (VAM) Ethylene Vinyl Acetate (EVA) Formaldehyde Carbon Monoxide Acetic Acide Polyvinyl Acetate Polyacetal 5.46 Table A.285 0.13 0.00 2011 5.14 www.145 0.33 0.46 0.22 1.4 0.00 0.4: Methanol and Derivative Capacities. MEED Projects.20 0.63 0.33 0.455 0.05 Source: NCB Estimates.445 0.3: Propylene Projects in Saudi Arabia Announced Project PetroRabigh Yansab National Chevron Phillips (SIIG) SEPC (Tasnee) APPC Sahara Petrochemical Saudi Kayan National Chevron Phillips (SIIG) SATORP (Saudi Aramco/Total) Source: MEED Projects Capacity Addition.9 0.5 Completion Onstream Onstream Onstream Onstream Onstream Onstream 3Q 10 4Q 10 4Q 15 Table A. Company Profiles .

khojah@alahli. Noel Rotap Paulina Chahine Senior Economist p.alwazir@alahli.zayat@alahli.: +966-2-646-3232 Fax: +966-2-644-9783 Email: n. Ph. Al To be added to the NCB Economics Department Distribution List: Please contact: Mr.alshaikh@alahli. estimates and projections in this report constitute the current judgment of the author/authors as of the date of this report. Macroeconomic Analysis Sector Analysis/Saudi Arabia Jarmo Kotilaine.kotilaine@alahli. The information herein is believed by NCB to be reliable and has been obtained from public sources believed to be Disclaimer: The information and opinions in this research report were prepared by NCB’s Economics Department. They do not necessarily reflect the opinions of NCB as to the subject matter thereof. This report may not be reproduced. However. Al-Ghalib Economist m. .D Senior Economist/Editor t. This report is provided for general informational purposes only and is not to be construed as advice to investors or an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or other securities or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments or other securities. Ph.D Group Chief Economist Majed Management Information System Sharihan Al-Manzalawi Financial Planning & Performance Economics Department The Economics Department Research Team Head of Research Said A. Albara’a Alwazir Senior Economist Lama Kiyasseh Economist l. NCB makes no representation as to the accuracy or completeness of such Sultan Khojah Economist s.rotap@alahli.alghalib@alahli.kiyasseh@alahli. distributed or published by any person for any purpose without NCB’s prior written consent.D Chief Economist Tamer El Zayat.www.

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