RATIONAL

For the last 50 years, the basic chemicals sector in KSA has seen an accelerated development via the monetization of stranded gas, bringing the total capacity installed in the Kingdom to over 100 million tons per annum. This has made SABIC a top-four global player and supported the development and expansion of an increasing number of other local players that have an international presence. The KSA basic chemicals industry is well positioned to continue expanding to maintain its global leadership in select value chain segments. It will do so by leveraging its cash cost advantage and market position and integrating new technologies and feedstocks to replicate this success with liquid cracking configurations and portfolios.

VALUE PROPOSITION

• The global chemicals market is expected to grow at a 3.7% CAGR, doubling production volumes from 1,870 mn ton/year in 2020 to 3,867 mn ton/year by 2040.

• The chemical sector is also expected to be a driver of demand for oil & gas, gaining share from all other segments, from ~13% in 2020 to ~31% in 2040.

• Basic chemicals present an opportunity to extract higher value-added from oil while keeping the Kingdom’s players at the forefront of the sector’s trends and technologies (e.g., shift to MFC, COTC, and PDH).

• Basic chemicals are critical in the activation of downstream industries (intermediate, specialty, and conversion chemicals) as well as the enablement of adjacent industries.

• The global chemicals market is expected to grow at 3.7% CAGR, doubling production volumes from 1,870 Mn Ton/year to 3,867 Mn Ton/year by 2040.

• Chemical sector is also expected to be a driver of demand for oil & gas, gaining share from all other segments, from ~13% in 2020 to ~31% in 2040.

• As oil demand continues to grow but is expected to peak by 2040, chemicals is becoming a most relevant area of focus for O&G countries and companies.

• The global chemicals market is expected to grow at 3.7% CAGR, doubling production volumes from 1,870 Mn Ton/year to 3,867 Mn Ton/year by 2040.

• Chemical sector is also expected to be a driver of demand for oil & gas, gaining share from all other segments, from ~13% in 2020 to ~31% in 2040.

• As oil demand continues to grow but is expected to peak by 2040, chemicals is becoming a most relevant area of focus for O&G countries and companies.

• Growth is driven by Asia, with China alone owning almost half of the market size of global chemical sales by 2030.

• Market growth in value is higher than global production expansion (in value estimated at CAGR of 5.4%) given that portfolio is steering towards more innovative and higher value-added products.

Projections shows that China may be able to balance flows only with shale gas-based volumes from the US.

KSA’s global share in chemicals volume is 4.7%, with a portfolio concentrated in basics and intermediates produced with gas crackers output.

• Shale gas in US has given rise to supply growth of ethane and LPG (propane, butane) but feedstock advantage is expected to erode with increase demand for ethane and propane which would drive up prices.

• China uses low grade coal to produce methanol (syngas) – share of methanol as feedstock to olefins is growing.

• Pace of development in shale gas and syngas is expected to slow down post 2030.

• Producers interested in polyethylene business typically employ ethane feedstock, while producers of polypropylene and butadiene derivatives consider heavier feedstock slate.