AL Naimi: Kingdom produces 62% of GCC Chemicals & 8% of global production 3 Dubai

"The businesses are changing as well. The chemical industry in the Gulf is no
longer simply operating facilities to manufacture products; it is becoming a key
enabler of other industrialization activities.

But before we talk about shaping the future, we should spend a few minutes to focus
on an area of the business which, like chemicals, touches our lives every day: the
upstream oil and gas sector. The upstream industry is based on a declining resource
model. In other words, the early days of an oil and gas field are often its best
days from a financial point of view. This may be counterintuitive for those in the
chemical industries who, after a start up period, expect to operate facilities for
several decades and require relatively modest capital investment to maintain or
debottleneck facilities.


A major change that has taken place during the past few years is that the Saudi
Arabian Ministry of Petroleum and Mineral Resources has begun to take a more
vital, strategic role in allocating feedstock to diversify and strengthen the
Kingdom’s economy.


In Saudi Arabia, we are blessed with abundant natural resources, and we were able
to overcome challenges and provide competitively priced gas and NGL products
fostering strong growth in our chemical industry. During the past 15 years, we have
been able to add massive new investments in Hawiyah and Haradh as well as our new
gas development at Karan and our new ethane straddle plant. Besides a record
number of wells being drilled by Saudi Aramco directed at new hydrocarbon sources
today, we also have opened up exploration for new gas in the southern part of the
Kingdom through our foreign partnerships with Shell, Sinopec, Lukoil and ENI.


Stewardship of our natural gas resources is a strategic strength for my nation and
for our region and beyond. A program that began not too many years ago, based
only on making productive use of associated gas that would have been flared, today
has been transformed dramatically, for the economic benefit of the entire world.
Even as we have produced vast amounts of natural gas, our production and reserves
continue to increase. In 1990, Saudi Arabia’s natural gas reserves were 181
Trillion Cubic Feet (TCF). At year end 2008 they were higher, at 263 TCF, and we
project that in 2010 proven reserves will be still even higher, as Saudi Aramco
targets discovering a minimum of 5 TCF of additional non-associated gas reserves
annually. Investment and application of new technologies are leading to greater
abundance of natural gas. Another important factor is the change in the ratio of
non-associated to associated gas. For instance in 1990, 75 percent of our natural
gas reserves were in associated gas, whose production can be constrained by the
factors of oil production. Today non-associated gas accounts for 48 percent of
total gas reserves, and we expect it to constitute a significantly higher
proportion in the future.


There is comparable good news in gas production. In 1981, Saudi raw gas production
was 1,654 million standard cubic feet per day (MMSCFD). Today it is approximately
8,800 MMSCFD, and we project production levels to exceed 13,000 MMSCFD by 2020.


This means our investment and management strategies are succeeding in meeting our
objective of always staying ahead of demand for natural gas - toward all of its end
uses in power generation, desalinization, and chemical feedstock.


We see the future of the chemical industry evolving so that local producers foster
further investment and creation of knowledge in many different sectors. I can
offer a few observations about the future situation from a Saudi Arabian viewpoint.
Our own national approach involves linkages between refining and chemical
industries both inside and outside the Kingdom.


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