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Saudi Arabia to require foreign energy companies to boost domestic input to 70%

October 14/2021

MOSCOW (MRC) -- Saudi Arabia will require foreign firms working in the energy sector, including petrochemicals and water desalination, to boost local input to at least 70% in order to secure government contracts, reported Reuters.

Energy Minister Prince Abdulaziz bin Salman discussed the plan to increase domestic input with local and international energy executives at a gathering in the Eastern city of Dammam last week, they said, confirming a video recording of his comments seen by Reuters.

He said the energy ministry would hold an event to announce the timeline, targets and mechanism for the plan, the latest effort to create new industries and generate jobs under Crown Prince Mohammed bin Salman's push to diversify the economy of the world's top oil exporter away from crude revenues.

Requirements for energy sector local content - which include workers, supplies and operations as well as added value - are currently around 30 to 35% but it is not clear how strictly these are enforced.

Authorities had already earlier this year handed foreign firms an ultimatum to set up regional headquarters by 2023 or risk losing out on government contracts in a bid to attract foreign capital and talent.

In the recorded remarks obtained by Reuters the prince did not specifically mention the link to government contracts when disclosing that all companies operating in the kingdom, including international firms, would have to raise the percentage of local services and energy-related products to 70%.

The three sources said securing government contracts would be contingent on meeting the new requirement for local content, which would require companies to invest heavily.

The Saudi energy ministry and the government's media office CIC did not respond to Reuters' requests for comment.

As MRC informed before, Worley has just been awarded a services contract for a residue upgrade project at Aramcos Ras Tanura refinery. The project will convert low-value refinery residue into higher-value products including gasoline, jet fuel and ultra-low sulfur diesel.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, propylene, ethylene, petrochemistry, Saudi Aramco, Saudi Arabia.
Category:General News
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