Falling demand and rising competition for feedstock, alongside a national push to bring the price of raw materials closer to market rates, are combining to put pressure on Saudi Arabia’s petrochemicals industry.
The Middle East Industry
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Electric vehicles may be set to become a more familiar sight on the streets of Dubai. The emirate has one of the world’s highest car ownership ratios and the authorities are expanding the infrastructure for battery-run cars and introducing new incentives to encourage people to switch to more environmentally-friendly options.
From the start of this year, Oman has doubled gas tariffs for industrial producers, with the move expected to squeeze margins for operators. However, the higher prices may spur a move towards greater efficiency, which could benefit the sector over the long-term.
Plans for increased spending on infrastructure developments are set to support further growth in Bahrain’s industrial sector via improved transport links and the construction of new large-scale facilities. However, falling oil revenue may impact funding availability for some capital works, potentially cooling long-term prospects in the sector.
Asia remains a key driver of growth for Qatar’s petrochemicals sector, with demand from the region fuelling investment and expansion projects. However, the long-term outlook is less certain after the cancellation of the $6bn Al Sejeel petrochemicals plant, one of the megaprojects targeted to come on line by the end of the decade.
Economic update | Saudi Arabia powering up
18 Nov 2014
The first wave of state-backed solar power stations in Saudi were recently unveiled as part of a much larger commitment to diversify the Kingdom’s electricity generation capacity.