The global petrochemical market is growing and this is set to continue, with some industry experts estimating a doubling in demand over the next 20 years.

Jubail and Yanbu are already a nerve-centre of petrochemical activity and expansions at Sabic companies located in the cities and new private sector ventures are further increasing the role of these cities in the market worldwide.

Overall production at Sabic plants is expected to reach 48 million tpy by 2010. And Sabic's global market share in key areas such as ethylene glycol, methanol, methyl tertiary butyl ether (MTBE) and polyethylenes is growing.

Ethylene production will grow from 3.2 million tonnes per year (tpy) to 5.5 million tpy over the next three years, says Fahad Al Sheaibi, president of the Polymers Group of Sabic.

In addition, Al Sheaibi points out that the domestic market in Saudi Arabia is growing rapidly. Sabic sells 40 per cent of its total production in Saudi Arabia itself. For polyethylene terephthalate (PET) packaging resins, total production will be absorbed by the Saudi market by 2002.

Overall consumption of polymers in the Kingdom has risen by 8.5 per cent per year since 1985 and was as high as 19 per cent in recent years. Last year, this consumption reached 650,000 tpy and is set to cross one million tpy by 2004.

The Kingdom is certainly well placed to play a key role in future petrochemical development in the Middle East, and can boast world class infrastructure, he says.

Jubail and Yanbu Industrial Cities are dominated by the giant primary industries of Sabic's affiliates.

The Royal Commission for Jubail and Yanbu is also actively encouraging the private sector to take advantage of the excellent infrastructure and utility provision. At the beginning of this year, US giant Chevron opened a $636 million joint venture in Jubail, the first privately-owned primary industry in Saudi Arabia.

To further encourage private investment in the Kingdom, a new private company has been launched.

Headed by the Al Zamil Group with a 15 per cent share, the Saudi International Petrochemicals Company (SIPC) will focus on potential petrochemical projects in the Kingdom, in particular enhancing the production and marketing of methanol.

SIPC and its partners in the Gulf Advanced Chemical Industries Company (GACIC) have signed joint venture, technology transfer and technical agreements with Huntsman Corporation and Kvaerner Process Technology to form a new manufacturing joint venture for the production of petrochemicals.

The joint venture, to be located in Jubail, will produce up to 7,000 tonnes per year (tpy) of maleic anhydride (MAH) and 50,000 tpy of butanediol (BDO) and THF at a total investment of $210 million.

The joint venture will use Huntsman Corporation's proprietary butane-to-maleic anhydride technology to convert n-butane supplied by Saudi Aramco to maleic anhydride. The MAH will then be used as a feedstock for the production of BDO and tetrahydrofuran (THF) using Kvaerner's MAH-to-BDO technology, according to an SIPC spokesman.

SIPC has signed a contract with Fluor Daniel for the overall management of the plant. The engineering has already started and plant start-up is expected in the third quarter of 2003.

SIPC is a Saudi joint stock company with a fully paid-up capital of SR500 million ($133 million), and initially participate in three limited liability companies, in joint venture with foreign partners.

Away from petrochemicals or secondary industries, private investments in Jubail and Yanbu are nothing new.

The revamped 315,000 barrels per day (bpd) Saudi Aramco Shell Refinery Company (Sasref) plant in Jubail, jointly owned by Saudi Aramco and the Royal Dutch Shell Group, produces chemical feed naphtha, dual-purpose kerosene, fuel oil, gas oil, reformate and long residue, and is primarily an export refinery.

Saudi Aramco also has a 50 per cent stake in the 360,000 bpd Saudi Aramco Mobil Refinery (Samref) in Yanbu (which came onstream in 1984) and the Saudi Aramco Lubricating Oil Refinery Company (Luberef), the second plant of which opened in Yanbu last year to complement a Jeddah refinery.