| von Armin Scheuermann

The numbers are huge: Abu Dhabi is planning to build its Chemaweyaat Taweelah Chemicals Industrial City in the sands of the desert for some US$20bn. This sum is predicted to rise to up to US$100bn in the final construction phase. In parallel, Borouge – a Joint Venture of plastics producer Borealis and Abu Dhabi National Oil Company (ADNOC) – is currently investing about US$5bn in expansion of the Ruwais olefins complex. Another US$3bn is to follow in the next few years. And all these investments are being made by a country with hardly more inhabitants than the metropolitan area of Berlin.
Also on the Persian Gulf, various petrochemicals companies are pursuing massive expansion programs at Al Jubail: Projects to the value of US$ 33bn are currently in progress. In Saudi Arabia a total of 21 large-scale oil and gas projects worth US$44bn were in various active phases of the project cycle at the beginning of 2011. According to the President of the oil company Saudi Aramco, Khalid A. Al Falih, chemicals production in the Gulf Cooperation Council states Bahrain, Kuwait, Oman, Quatar, Saudi Arabia, and United Arab Emirates is set to double from the present level of US$40bn to US$80bn by 2020. For sake of comparison: The German chemical industry reported total sales of US$197bn in 2009.

Long-term Strategy to Generate Greater Added Value

The chemical industry projects belong to ambitious industrial development plans launched by the oil- and gas-rich states of the Persian Gulf to generate greater added value. The Emirate Abu Dhabi, which has about 90 billion barrels of crude oil reserves, is pursuing a long-term strategy of domestic oil processing. Here the oil states can take advantage of cost leverage. In contrast to the industrialised countries of the west, which have to pay world market prices for the raw material essential for their entire chemicals production, and especially for plastics manufacturing, the Gulf States can produce primary plastics low cost using their own oil. Thus the price for 1 million BTU may be 7 to 8 US$ in the USA, but just 70 to 80 US cents in Saudi Arabia. But the focus of Arab investors extends beyond (primary) chemicals. Processing of aluminium, iron, steel, and plastics, as well as the production of building materials, are due for massive expansion.

Construction of specialised industrial parks

Construction of specialised industrial parks is planned to achieve these aims: Current construction projects include, for example, Abu Dhabi Polymer Park (investment: US$4bn), Taweelah Aluminium Smelter (US$2bn under construction, another US$2bn in the planning stage), and the projected Abu Dhabi Metal Park (US$3bn).

The three largest chemicals projects are presently under construction on the Persian Gulf. These are the Abu Dhabi Chemicals Industrial City chemicals complex (Chemaweyaat), expansion of the Ruwais petrochemicals site (Abu Dhabi), and extension of the Al Jubail petrochemicals complex (SAR).

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