Crashing oil prices have lentmuch more urgency to Saudi Arabia's bid to findmore natural gas (WGI May6' 15). With the budget deficit hitting nearly $ 100 billion last year, the Saudi leadership is under intense pressure to diversify the oil-dependent economy by creating a bigger downstream sector fueled by cheap gas. But for all state giant Saudi Aramco's determination to press on with its gas agenda, some industry experts believe it will face huge problems producing enough gas to allow downstream expansion while still meeting domestic power demand rising by 4%-5% annually. The new era of industrial diversification will be based on high-value specialty chemicals. "We need to radically alter the downstream equation to derive greater benefits in-kingdom, through knowledge-based and innovation-driven small and medium sized enterprises," Aramco boss Amin Nasser said in Jubail this month. "Saudi Arabia is already a global leader in petroleum and petrochemical commodities, but today we have a tremendous opportunity to also become a leader in downstream conversion." The focus to date has been on basic chemicals such as polymers, bulk petrochemicals and fertilizers. Diversification into specialty chemicals — a category that includes industrial gases, adhesives, sealants and catalysts — is expected to hoist returns from current levels of about $500 per ton to roughly $2,000/ton by 2040, Aramco says.
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