Saudi petrochemicals industry to maintain competitiveness, says Al-Falih

Saudi petrochemical companies will continue to benefit from fuel and feedstock priced lower prices than other markets, even as the sector faces subsidy cuts next year, the Kingdom’s energy minister Khalid Al-Falih told Argaam.

"The Saudi petrochemicals industry will maintain its competitive nature amongst other global markets," Al Falih said, commenting on the upcoming subsidy cuts on fuel and feedstocks.

"We should invest in innovative and value-added products that would garner a strong market share," he added.

In December last year, Saudi Arabia said it would extend its timeline for the lifting of energy subsidies, an important element in the country’s move to overhaul its economy and balance the budget. Subsidies will be lifted gradually so that fuel prices compare to international levels between 2018 and 2025, compared to a previous target of 2020.

As part of the plan, prices of natural gas prices including ethane, which is used as feedstock for the petrochemical industry, will be 75 percent-linked to international benchmarks in 2020-2021, although a ceiling will be imposed on them in 2021.

Meanwhile, natural gas liquids, another petrochemical feedstock, will be 90 percent-linked in 2020.