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Petrochemicals Plants in the Middle East Expand but Face Challenges, Business and Industry Trends Analysis

A threat to U.S. and European plastics exporters is the emergence of plastics producers in the Middle East.  Initially, Middle Eastern plastics firms thought they might garner competitive advantage in making products such as polyethylene (PE) at low cost due to a ready, local supply of natural gas as a feedstock.  However, the boom in low-priced natural gas from American shale production is changing the marketplace and giving the U.S. a significant cost advantage of its own.
Hopes for growing global sales spurred the construction of a number of new petrochemical and plastics plants throughout the Middle East.  Ethylene, a basic commodity used by the global plastics industry, is a major focus of petrochemicals plants in this region.  Borouge, a joint venture between European plastics company Borealis A/S and the Abu Dhabi National Oil Co. (ADNOC), completed the Borouge 3 expansion project in Ruwais, Abu Dhabi in late 2014, and full capacity production was achieved in 2016.  The project encompasses a new ethane cracker and one of the world’s largest olefins conversion units.  Now, ADNOC is building the Ghasha Mega-Project, a multi-billion dollar offshore sour gas development that is expected to produce more than 1.5 billion standard cubic feet of natural gas per day.  As of mid-2022, the company had secured $2 billion in contracts for the project.  
Aramco (Saudi Arabian Oil Company), and the Dow Chemical Company have a joint venture called Sadara Chemical Company.  It completed the world’s largest integrated chemical complex ever built in a single phase, in Jubail Industrial City, Saudi Arabia.  The complex is comprised of 26 state-of-the-art manufacturing units, over 3 million tons of capacity per year and an investment of about $20 billion. 
Meanwhile, Saudi Basic Industries Corp.’s (SABIC) many facilities are among the largest chemical and ethylene plants in the world.  In Saudi Arabia, the company has multiple complexes located in the industrial cities of Al-Jubail and Yanbu.  Some of these complexes are operated with multi-national joint venture partners such as ExxonMobil, Shell and Mitsubishi Chemicals.  SABIC acquired GE Plastics and GE’s petrochemical operations in Europe and is making investments in China as part of its global growth strategy.

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