Economic viability of the Saudi Arabian petrochemical industry: methanol as a case study

Thesis/Dissertation · Thu Jan 01 04:00:00 EST 1987

OSTI ID:5991148

Al-Salem, A M

In the pursuit of the diversification strategy, Saudi planners invested a sizable amount of oil surplus in export-oriented petrochemical projects at Jubail and Yanbu. For this strategy to be realized, the projects must be economically viable. Economic viability entails the presence of petrochemical plants that are self-sustaining and self-perpetuating in the long run without state subsidies. In view of the projects, heavy reliance on state subsidies along with their location in a remote area, far from the source of demand, it is hypothesized that, barring a significant shift in the development strategy, a dynamic industrial sector focusing on the development of the petrochemical industry is unlikely to emerge in Saudi Arabia and that the export-led growth strategy that accords it a key role in the nation's development is not likely to prove viable. In verifying the hypothesis, a comparative cost analysis was conducted comparing the cost structure at the Ibn-Sina methanol plant to a similar plant in Alberta, Canada. According to the authors forecast of methanol revenues and costs, the Saudi petrochemical industry exemplified by the methanol project emerges to be as a net absorber of rather than contributor to the nation's financial resources and in this regard appears to impede the process of capital formation and economic growth.

• Research Organization: California Univ., Riverside (USA)
• OSTI ID: 5991148
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020500* -- Petroleum-- Products & By-Products
03 NATURAL GAS
030400 -- Natural Gas-- Products & By-Products
29 ENERGY PLANNING, POLICY, AND ECONOMY
294000 -- Energy Planning & Policy-- Fossil Fuels
ASIA
CANADA
CAPITAL
CHEMICAL PLANTS
COMPARATIVE EVALUATIONS
ECONOMIC ANALYSIS
ECONOMIC DEVELOPMENT
ECONOMICS
INDUSTRIAL PLANTS
METHANOL PLANTS
NORTH AMERICA
PETROCHEMICAL PLANTS
SAUDI ARABIA