Sabic’s CEO and vice chairman has called for a unified approach for the development and diversification of the Saudi downstream sector, citing the success of the petrochemical model.

Mohamed Al Mady suggested a national taskforce should be set up to lead the downstream initiative rather than having several companies doing their own thing.

He told the 2014 Saudi Downstream Forum in Yanbu that Saudi Arabia needed a step change in the kingdom’s approach to the downstream based on the Royal Commission model that drove the development of the petrochemical industry

He called for initiatives to drive further downstream development including improved infrastructure, free-trade zones to support investment inflows and government investment in the early training of employees.

“These imperatives cannot be achieved if every company, every industry, every ministry, is following its own agenda, no matter how well-meaning the agenda may be,” said Al Mady.

“Downstream diversification extends beyond the interests of a single industry. It requires a coordinated and consolidated approach from business, government, ministries and entrepreneurial enterprises.”

The growth of the petrochemical industry in just four decades from a standing start to a world-class pillar of the economy worth $354 billion is evidence for the success of the model, he said.

Growth in the petrochemical industry continues to outstrip the economy as a whole, averaging nine to 10 per cent over the past years against GDP growth of four to five per cent, said Al Mady.

The industry has also been the catalyst for growth in other areas of the economy, including banking, construction and insurance, he added.

A Sabic plant: the petrochemical model has proved successful

Sabic, along with Saudi Aramco and the Public Investment Fund, began the establishment of the Industrial Investment Company to attract resources into the maritime, automotive, power, water and electrical equipment sectors.

The company has also expanded its own operations into performance chemicals and engineering thermoplastics and made significant additions to its global innovation network, including the opening of the Sabic Plastic Applications Development Centre in Riyadh’s Techno Valley last year.

These initiatives are specifically focused on building downstream opportunities in key industries including automotive, construction, consumer electronics and packaging, said Al Mady.

“Business and government are each doing their part. But I do not believe we can go much further within the limits of the current structure.” said Al Mady.

Meanwhile, Saudi Arabia plans to build a plant able to turn crude directly into chemicals, without first having to refine the oil, Saudi Oil Minister Ali Al Naimi said.

In other Sabic news, four international engineering companies have submitted bids to build two petrochemicals plants for Sabic and Japan’s Mitsubishi Rayon in Saudi Arabia, Reuters reported quoting industry sources.

They said South Korea’s Daelim Industrial, France’s Technip, Spain’s Tecnicas Reunidas and Taiwan’s CTCI had bid for the two-plant project in the Red Sea industrial city of Jubail.

One of the plants will produce up to 250,000 tonnes a year of methyl methacrylate monomer (MMA), while the other will produce up to 40,000 tonnes of polymethyl methacrylate (PMMA).