Saudi Arabia pushes downstream production

The Kingdom of Saudi Arabia posted a 6.6%real Gross Domestic Product (GDP) growth in the fourth quarter of 2011, up from the previous quarters' achievement, according to data from the country's Central Department of Statistics. The oil sector continues to bring revenues to the Kingdom's economy expanding by as much as 6.1% in the fourth quarter. The private sector also showed faster growth with 9.9%, far exceeding the performance of the state sector which expanded by 3.6%.
 What triggered such positive, and promising, scenario is the recent real estate boom and heavy government outlays on infrastructure which helped push construction sector to grow by a staggering 13.3%. The Saudi government had previously announced that real GDP grew 6.8% in 2011, up from 4.6% in 2010, its fastest growth since 2003.
 Notable in these developments is the sudden increase in the Kingdom's non-oil exports which surged by as 26% in February 2012. Statistics showed that the total weight of exports reached about 3.9 million tonnes, up by 14% compared to the same period in 2011. Of this volume, petrochemicals accounted for the biggest exported product at around 34%, followed by by plastic products and foodstuffs. China was Saudi Arabia's biggest customer for non-oil exports, followed by the United Arab Emirates.

Investment in downstream sector
Saudi Arabia is investing billions of dollars in its petrochemicals production, with efforts pushing for the shift in emphasis to specialised downstream products in order to generate revenues and alleviate the unemployment problem. Refining operations are not labour-intensive, thus the direction is go to downstream.
The industrial zones of Jubail and Yanbu, situated on the Gulf and the Red Sea coast, respectively, have so far attracted investments amounting to $100 billion. An additional $50 billion is expected to come in to finance new projects in the area of petrochemicals in Jubail and Yanbu to generate 100 million tonnes annually by 2016. Currently, the zones' production capacity reaches 65 million tonnes.
Jubail and Yanbu have both already attracted plastics producers. Several projects are underway, one is the Sadara Chemical Company, a $20-billion joint venture between Saudi Aramco and Dow Chemical which will bring in additional 10 million tonnes. This, and other upcoming projects, are helping Saudi Arabia emerge as a major player in the petrochemicals industry. The country is determined to capture a niche market refining crude oil and gas into basic chemicals such as polymers that the government has taken extra efforts to attract foreign partners into joint ventures with low-cost gas, a common feedstock and source of power needed in the energy intensive production process. The government is also eyeing the development of solar power, and is considering a large-scale entry into renewable energy to alleviate impending power shortage and generate employment. Joint venture agreements with German and South Korean polysilicon companies to produce the material used in photovoltaic panels have already been signed, as the Kingdom plans large-scale adoption of solar power.
GCC petrochemicals companies' profits rose 60% in the third quarter of 2011 hitting $3.57 billion, according to Global Investment House. Saudi companies performed well in achieving profitability, with Saudi Basic Industries Corporation (Sabic), Yansab, Safco, Sipchem and Tasnee all exceeding profit expectations.