The Eastern Province has natural resources and is home to petrochemical industries, but what vision exists for diversifying the local economy?
PRINCE SAUD: Diversification of the local economy invariably starts with establishing the procedures to support all forms of investment, as well as gradually reducing reliance on single-resource income. First, we must improve the environment and business climate in which institutions operate by facilitating coordination and collaboration between the private sector and the relevant authorities. Developing an economic dialogue between decision makers and representatives of the private sector will not only benefit businesses already located in our region, but will also encourage greater investment from both domestic and international sources. In the world’s most developed economies, small and medium-sized enterprises (SMEs) account for the majority of GDP and jobs. We must seek to encourage entrepreneurs to start up their own projects, while also supporting established SMEs to help them grow and flourish. We are also giving serious consideration to transforming basic industries into those that support energy production, in order to contribute toward cost reduction and increased productivity.
What measures are employed by the Kingdom to reduce the negative environmental impacts that can result from oil exploration and production?
PRINCE SAUD: In the transportation sector alone, the capital required to boost the use of alternative energy and reduce reliance on fossil fuels by 25% by the year 2030 amounts to $400bn globally, according to the latest report issued by the International Economic Forum (in collaboration with Strategy&). This is certainly a daunting cost. We have, however, established some projects that contribute towards reducing environmental damage through a reduction in production. We are investing in alternative energy power and desalination plants, which will help reduce the amount of oil being consumed and generate cleaner energy. One example is the establishment of the world's biggest solar-powered water desalination plant in AI Khafji.
There are also efforts to improve energy efficiency, allowing us to burn less oil and gas while still providing the energy required by a growing economy. The Saudi Energy Efficiency Centre is leading the way in this effort, introducing initiatives such as stricter efficiency standards for air-conditioning units and smart metering for homes and businesses. These sorts of programmes will provide the Kingdom with a cleaner, more efficient energy mix, reducing our need to produce and consume so much oil and gas domestically, in turn decreasing the industry’s environmental impact.
To what extent will the emergence of an American petrochemical industry impact the Kingdom’s dominant position in this sector?
PRINCE SAUD: Competition is definitely the best motivator for product quality in general. The quality and price competitiveness of the Kingdom’s products are what helped us establish our pre-eminent position in this sector. We have some of the world’s most advanced facilities located in Jubail and Yanbu, both of which are being expanded, demonstrating our commitment to maintain a world-class petrochemicals industry. The expansion of Jubail is an investment of some $88bn due for completion in 2024. One of the most significant projects in this expansion is the Sadara petrochemicals complex, which is scheduled to be completed by 2015. Once it comes on-line, it will be the largest petrochemicals complex in the world with a total production capacity of roughly 3m tonnes per annum of petrochemicals. The facility will have a cracker that can use both ethane and naphtha for feedstock, the first such multi-feed cracker in the region, giving it greater flexibility for sourcing feedstock and expanding the types of products it can make. These investments, along with Saudi Arabia’s strategic geographic position close to the growing markets of Asia and India, will ensure the Kingdom’s leading position in the industry for years to come.
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