Some petrochemical firms operating in Saudi Arabia are rethinking their expansion plans due to restrictions on ethane supply and the government pushing them downstream where they do not enjoy subsidized feedstock. Furthermore, cheap US shale gas is encouraging firms operating in the US to consider expanding petrochemicals output with a view to exporting to Asia, adding a new factor to the Saudi export equation.

The government is building new “industrial cities” and “plastics clusters” based on low-cost hydrocarbons. Fearing social unrest, it aims to create jobs to stem the tide of unemployed youth. Downstream industries are far more labor intensive than upstream – employing up to 10 times more workers per investment unit than an ethylene cracker. But some private sector petrochemical firms are unenthusiastic about the plan. (CONTINUED - 2336 WORDS)