The A’sharqia, or Eastern Province of Saudi Arabia, continues to be at the forefront of the country’s economic and industrial advancement. The province is also a microcosm of the government’s diversification efforts, with a number of rapidly growing industries thriving across the province. These businesses represent a varied cross section of activities ranging from oil and gas production and basic heavy industries, to knowledge-based information technology operations and service-oriented tourism offerings. Among these are many of the country’s key industries for both domestic use and export value, such as agriculture, electricity generation, water desalination, petrochemicals production and other downstream industries. A number of factors work together to make the province’s economy function effectively – a steady revenue stream of petrodollars, ample fuel and electricity to power industrial zones and desalinisation plants, a well-developed transportation network of road, rail, seaports and airports, as well as other strategic advantages.


As Saudi Arabia’s largest province, representing 36% of the country’s total landmass with a total of 778,500 sq km, the Eastern Province is home to vast mineral wealth and other natural resources vital for the Kingdom’s economic development. Split among 11 separate governates, the region also displays a wide array of geographic diversity, ranging from the lush oasis of Al Hasa to the vast desert expanses of the largely uninhabited Rub Al Khali (Empty Quarter). The province serves as an important transport hub due to its road links and planned rail links with its neighbouring Gulf states, as well as its ports and airports. Primary industrial and commercial activity is centred around the capital city of Dammam and nearby Jubail, and to a lesser extent in other large urban areas, such as Al Hasa, Ras Tanura, Dhahran, Al Khobar and Al Qatif.


As one the country’s most industrialised and populous regions, the Eastern Province boasted 1095 productive licensed factories in 2010, topped only by the more populous provinces of Makkah and Riyadh, which had 1194 and 1778, respectively, according to the latest figures from the Ministry of Commerce and Industry. The most prolific industries were the 177 factories producing non-metallic products, followed by 147 foodstuffs and beverages manufacturers and 127 chemical factories. Maintaining this momentum, the Eastern Province achieved the highest value of loans approved by the Saudi Industrial Development Fund (SIDF) in 2011, totalling SR4.73bn ($1.26bn) spread over 30 loans, according to SIDF data. This brought the cumulative total of SIDF loans for the province to SR44.24bn ($11.79bn), more than double the next closest province of Riyadh, with SR19.31bn ($5.17bn), followed by Makkah, which saw SR15.19bn ($4.05bn).

Real Estate

With business and investment continuing to pour into the province, creating new employment opportunities and swelling the population, the rental and real estate market is maintaining its strong performance on par with other major cities in the Kingdom, such as Riyadh and Jeddah. The populations of two of the province’s major urban centres, Dammam and Khobar, grew by a compound annual growth rate (CAGR) of 3.3% and 4%, respectively, between 2004 and 2010, according to the 2010 government census.

As a result of this population surge, real estate prices have been climbing for both rental and purchase in the Dammam and Khobar metropolitan areas. The average price of a single-family dwelling (a villa or duplex) increased 14% from SR3075 ($819) per sq metre to SR3510 ($935) per sq metre from the fourth quarter of 2010 to the fourth quarter of 2011, according to data from a 2011 Colliers International report on the market. The purchase price of multi-family dwellings also grew by 10%, from SR2588 ($690) per sq metre to SR2841 ($757) per sq metre over the same period. Rental prices have risen even more rapidly, with the price of single-family units and multi-family units jumping 17% and 15%, respectively, over same period.

Seeking to capitalise on this trend, a number of developers have stepped in to meet market demand by creating thousands of new homes in the province’s key cities. A total of 4300 new units are projected to be added between 2014 and 2016 in just five property developments, according to Colliers. The largest of these include the 700-unit Dammam Hills and the 850-unit Abraj Al Salam projects, both scheduled to come onto the market in 2015, as well as the 2100-unit Khobar Lakes Gated Residential Community, under development by Emaar Middle East, which will have its first phase of units available in 2016.

In addition to this influx of new dwellings, other multi-use projects – that is, developments that combine residential, commercial, business and leisure activities in one self-contained location – are also being undertaken in the Eastern Province.

One example is the 3.3m-sq-metre Al Marina development, being constructed by Injaz Development Company along the Al Khobar-Dammam coastal corridor. The development will feature villas, residential units, commercial towers, schools, mosques, medical facilities, malls, hotels, restaurants and tourism, social, sports and recreational amenities.

Industrial Cities

To maximise the province’s many benefits, centralised centres of commerce and industry are being developed at various locations. These now include the Dammam Industrial Cities I and II and the Jubail Industrial Cities I and II. These business centres should help to crystallise the developmental goals laid out in the government’s various long-term strategies and create a collaborative environment to bring together disparate resources under one umbrella. The Jubail Industrial Cities, along with their west coast counterpart in Yanbu, and more recently the Ras Al Zour Industrial City, are overseen by the Royal Commission for Jubail and Yanbu (RCJY).

Think Big

The largest industrial centre is the Jubail Industrial City, which is responsible for generating 12% of the country’s GDP. The centre was founded in 1975 on the province’s coast, approximately 100 km northwest of Dammam. It contains an industrial area of 14,311 ha, according to the Jubail Industrial City Master Plan. The second Jubail Industrial City (JIC II) was initiated in 2006, adding another 6200 ha of land, which is expected to meet demand through 2022. The SR200bn ($53.3bn) expansion will be carried out in four phases, with work on the first SR4.7bn ($1.25bn) phase starting in 2007.

According to the project’s supervisor, the American contractor Bechtel, JIC II will add a second industrial area to house up to 22 new primary industries and will have several major infrastructure upgrades, including an expansion of King Fahd Industrial Port, pipeline refurbishment and new desalination plants. Although it houses a variety of industrial activities, JIC II has also attracted a number of large-scale petrochemicals projects, including the $20bn Sadara petrochemicals plant and the Saudi Aramco Total Refinery and Petrochemical Company (SATORP).

Stay Dedicated

Built as one of the first dedicated industrial cities in 1973, the Dammam First Industrial City was built in three phases to cover a total area of 2.7m sq metres housing 80 factories staffed by 22,000 workers. Established in 1978 to accommodate the rapid expansion of the first project, the Dammam Industrial City II is substantially larger, at 25.5m sq metres, and is home to 340 factories that employ 75,000 workers and produce an array of products, such as petrochemicals, plastics, construction material, aluminium and steel, food, paper, electrical equipment, furniture, medical supplies and leather. The cornerstone for Dammam Industrial City III was laid in April 2012. It is targeted to attract some 2000 firms with a capital investment of SR300bn ($79.95bn), according to province officials speaking at the groundbreaking ceremony. The new city will add 48m sq metres of space.

Another industrial city has recently come under the wing of the RCJY – the Ras Al Zour Industrial City, which is primarily focused on developing mining and related mineral processing activities. The “mineral city” will utilise the notable reserves of minerals in the area, particularly bauxite and phosphates, to develop numerous downstream industries, including aluminium processing and fertiliser production for both domestic and export purposes. Although a relative newcomer to the industrial city scene, Ras Al Zour has already laid claim to the world’s largest fertiliser plant – the Ma’aden Phosphate Company, a joint venture between Ma’aden and the Saudi Basic Industries Corporation (SABIC). The $5.6bn plant should be able to produce some 3m tonnes of diammonium phosphate annually, as well as 400,000 tonnes of ammonia and 200,000 tonnes of phosphoric acid once at full capacity.

Black Gold

The heart of the Kingdom’s petroleum industry, the Eastern Province sits atop a sea of lucrative hydrocarbons reserves. These amount to more than 20% of the entire planet’s proven oil supplies, according to the Eastern Province’s Chamber of Commerce and Industry. It is also the home to the largest oil and gas company in the world, Saudi Arabian Oil Company (Saudi Aramco), which has been headquartered in Dahran since its inception in 1933. Saudi Aramco held reserves of 259.7bn barrels of generally high quality light and extra light crude oil and condensate and produced 3.3bn barrels of oil in 2011, according to its 2011 annual review.

Tallying The Reserves

Of the more than 100 separate oil and gas fields dotting the country’s landscape, eight of the most productive fields are located in the province, containing more than half of the Kingdom’s total reserves. These include the world’s single largest petroleum deposit. Located at the 3262-sq-km Ghawar oil field, the deposit holds some 70bn barrels of crude. Likewise, the Saffaniyah, Khafji and Hout fields are believed to have a combined total of 25bn-35bn barrels.

While efforts have in the past been focused primarily on petroleum exploration and production, an increasing demand for natural gas has also led to impressive new discoveries within the region. The most significant of these is the Karan gas field located in the Gulf, which reached full production capacity of 1.8bn standard cu feet per day in 2012 and is responsible for increasing domestic natural gas production by 18%, according to Saudi Aramco.

Refining & Petrochemicals

Although the country’s energy exports have provided a crucial underpinning for its economy, the Kingdom is now looking to capitalise on its competitive advantages by growing its own downstream industries.

The most notable of these advantages, its ample petroleum supplies, provides both an inexpensive power source and plentiful feedstock for a number of value-added activities, such as refining, smelting and petrochemicals. Unlike many petrochemicals operations in the region that depend on the feedstock of natural gas to derive end-products, Saudi Arabia’s crude-heavy hydrocarbons sector has guided the industry towards deriving petrochemicals by converting refinery products into aromatics. Two of the primary companies dominating the petrochemicals sector are both currently based within the province: Saudi Aramco and SABIC, which was initially established in Jubail in 1976.

One of the more significant investments recently taken on in this field is SATORP, a megaproject carrying a total price tag of between $9.6bn and $12bn. The new state-of-the-art refinery and petrochemicals complex will encompass a total area of 1200 acres, including a built up area of 70,000 sq metres. It is a joint venture between Saudi Aramco, which holds a majority stake of 62.5%, and the French oil major Total, holding the remaining 37.5%.

Setting The Pace

After moving from the official formation of SATORP in 2006 to the awarding of all engineering, procurement and construction contracts by July 2009, building works (which were employing up to 45,000 workers at a time) kept the project on track to being fully operational by third quarter of 2012. These contracts covered the construction of an array of projects, including distillation, hydrotreating and conversion units; sulphur and amine units; aromatics units; plant and auxiliary utilities; a tank farm; pipelines; and a port tank farm.

While the new 400,000-barrels-per-day (bpd) refinery should provide a steady supply of low-sulphur fuels like gasoline, diesel and jet fuel for export and domestic consumption, the facility’s aromatics plant will also contribute significant amounts of feedstock for the petrochemicals industry.

Further refinement of these aromatics may also be possible down the line, thereby providing additional products to utilise the complex’s paraxylene feedstock by adding a purified terephthalic acid project. The process is already being utilised by a SABIC affiliate, Arabian Industrial Fibers (Ibn Rushd), at its chemicals plant in Yanbu.

The plant is also unique in being the first Saudi Arabian refinery to produce coke using a two-train principle for all the hydro-skimming units and on single unit for the conversion units – a process which the company says will produce zero fuel oil within its coker under normal conditions. Like other industrial operations in the city, the nearby King FahdIndustrial Port provides warfage access for both tanker ships and cargo containers for its export-bound output. A 25-km logistics corridor utilising pipelines and a coke conveyor system link the port facilities of the SATORP complex.

Saudi Aramco is also involved in a second, even larger $20bn joint venture with chemical giant Dow Chemical Company to form the Sadara Chemical Company – its associated factory will also be located in JIC II. The plant will produce a wide variety of cutting-edge materials including polyurethanes ( isocyanates and polyether polyols), propylene oxide, propylene glycol, elastomers, linear low-density polyethylene, low-density polyethylene, glycol ethers and amines marketed to eight countries in the region (including Saudi Arabia) when it opens in 2015.

The country’s largest refinery currently in operation is also located along the Arabian Gulf. The Ras Tanura refinery, which is between Dammam and Jubail, has a maximum output of 550,000 bpd.


Saudi Arabia’s efforts to become a mineral processing centre also takes advantage of the Eastern Province’s plentiful resources. The centrepiece of the ambitious strategy is the $10.8bn Ras Al Khair aluminium smelter, located 90 km north of Jubail. A joint venture between Ma’aden, with a majority 74.9% stake, and US giant Alcoa holding the remaining 25.1%, the plant is billed by Ma’aden as the largest and most efficient vertically integrated aluminium complex in the world.

Although the plant began production in December 2012 using imported raw materials, Ma’aden will eventually source its bauxite from the company’s Al Ba’itha mine near Quiba in north-eastern Saudi Arabia (some 600 km north-west of Ras Al Khair) starting in 2014. When operating at full capacity, the GCC’s first alumina refinery will be able to produce some 1.8m tonnes of alumina per year.

This, in turn, will be processed at a 740,000-tonnes-per-annum (tpa) capacity smelter with further value-added downstream rolling mill capabilities of 380,000 tpa of sheet, end and tab stock for the manufacture of cans and other products, including auto, construction and foil applications.

Dedicated water and power supplies for the project are locally sourced from a purpose-built power and desalinisation plant, with a total installed capacity of 2400 MW of electricity and 1.025m cu metres of water per day. The facility requires 1350 MW of electricity and 25,000 cu metres per day of water.


Because of the prevalence of power-hungry industries within the Eastern Province, the local power generation and distribution system is likewise more robust than in other regions of the country. The Eastern Province consumed 31% of all power sold domestically in 2011, on par with the 31% and 30%, respectively, of the more populous central and western provinces of Riyadh and Makkah.

But while the gross amount of power consumed was roughly equal, the Eastern Operating District diverted 46% of all electricity consumed by its customers to industrial use, compared with a national average of just 19%, according to Saudi Electrical Company SEC data. By comparison, power operators serving the western and central provinces dedicated just 7% each of their power to industrial usage.

Although companies based in the province now pay nationally uniform tariffs, the industrialisation of the region in the early 1970s was accelerated partially by differential tariff rates. These significantly favoured industrial operators setting up shop in certain provinces for a few short years, thus prompting many firms to locate within the province.

As dictated by a 1972 ordinance, industrial consumers located in the key production centre of Dammam, for instance, were required to pay just SR0.10 ($0.027) per KWh (residential customers were charged SR0.14, or $0.037, per KWh), according to the Electrical and Cogeneration Regulatory Authority. This compared favourably not only to other industrial zones throughout the world, but also domestically within the Kingdom, where the next-lowest industrial rates in Jeddah were SR0.13 ($0.035), with most other major cities nearly double that at SR0.18 ($0.048) in Makkah, Taif and Medina, and SR0.20 ($0.053) in Yanbu.

This regional favouritism ended just two years later, in 1974, when tariffs for industrial consumption were changed to a single national rate of just SR0.05 ($0.013) per KWh. As of 2012, industrial power is applied uniformly across the country at rates varying from $0.026 to $0.69 per KWh, depending the time used and whether the business operates with an electromechanical or digital meter.


Capitalising on the region’s competitive advantages, energy-intensive industries including mining, smelting and petrochemicals are a natural fit for the Eastern Province and should help it continue to thrive. Already established as reliable cornerstones of the economy, the petrochemicals and oil and gas sectors should continue to grow through new investments in production, while the mining sector looks to form a triad of natural resource exploitation through new mineral production and refining facilities. These resources, along with the advantages provided in the flourishing industrial cities across the province should also provide a solid foundation for downstream businesses across an increasingly diverse array of fields. Strong support for major infrastructure in transport and utilities are expected to ease any growing pains these projects may bring, while producing more efficient movement of goods within the country and further afield.