According to Abdulwahab al-Sadoun, the Gulf Petrochemicals and Chemicals Association (GPCA) secretary-general, the coronavirus pandemic may affect Saudi Arabia's $35-billion investment in some petrochemical projects in China which will have a total production capacity of 7.5 million tons/year, representing 45% of the overall production capacity of Saudi producers outside the kingdom. As-Sadoun however, noted that how the pandemic would impact on the investment is yet to be seen.
State-owned Saudi Aramco has agreed to develop a $10-billion refining and petrochemical complex in the city of Panjin in a joint venture with Panjin Sincen and China North Industries Group (Norinco). Aramco also signed a deal on the acquisition of a 9% interest in Zhejiang Petrochemical's 800,000 bpd refinery and petrochemical complex in Zhoushan.
The oil giant has already partnered with Fujian Petrochemical Co and ExxonMobil in a refining and petrochemical complex joint venture in China. Meanwhile, Aramco’s affiliate Saudi Basic Industries Corp. (SABIC) has a petrochemical joint venture with Sinopec in Tianjin. SABIC generates a fifth of its global sales revenue from China.
The coronavirus pandemic has hurt the industrial sector in China. The country's industrial output fell 13.5% year-on-year to a 3-decade low in the January-February period, official data showed. China's exports of products made from polyester, PE, PS, and ABS to the US are forecast to fall by 30% year-on-year in Q1.
This downturn is expected to impact the petrochemical production of Saudi Arabia and other Gulf nations. GPCA said that GCC members (Saudi Arabia, Qatar, UAE, Kuwait, Oman, and Bahrain) would likely have their petrochemical production capacity increase to 177 million tons/year in 2020, from 175.1 million tons/year in 2019. However, the growth is slowing, with no new major projects expected to come on-stream this year, GPCA noted.
