Saudi share of world chemical output to double

Saudi Arabia's share of global chemical output may almost double to 15 % within five years as firms add capacity in the holder of the world's fourth-largest natural gas reserves, an official said on Monday.

Companies in the kingdom plan to spend about $80 billion during the next five years adding capacity and capitalising on the relatively cheap supplies of gas used in production, Abdulwahab al-Sadoun, energy chief at the Saudi General Investment Authority (SAGIA), said.

The authority licences foreign investment in the kingdom.

"Saudi Arabia's share of the total world petrochemical production is now 8 %," Sadoun told reporters on the sidelines of a petrochemicals conference organised by the Middle East Economic Digest in Bahrain. "It will reach 13 % in 2010 and in 2012 it will reach 15 %."

Saudi Arabia produces 7 million tonnes per year of ethylene, a chemical used to make plastics. That may rise to 17 million tonnes by 2012, Sadoun said. More than 85 % of the chemicals will be exported, he said.

Saudi Arabia has enough gas reserves to sustain the expansion plans. Economic growth in China will pace demand, he said.

Though some projects have been delayed due to higher-than-expected construction costs "most of the projects in the pipeline are on time and some of them ahead of time," Sadoun said, declining to comment on individual projects.

Dow Chemical Co. and state-owned Saudi Aramco said this month they agreed to build a "mammoth" petrochemical facility on Saudi Arabia's Gulf coast by 2012. The project may cost at least $20 billion, according to industry sources, who did not want to be identified.

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