EGYPT - The Prospects For World & ME Petrochemicals.

None of the current estimates of project costs is reliable, simply because they are rising by the day. For example, a recent study by the Doha-based Gulf Organisation for Industrial Consulting (GOIC) said less than $45 bn worth of investments will change the face of global petrochemicals production by 2010, ranking the Middle East first among producers.

To present a paper at a conference in Abu Dhabi on Jan. 20-21, GOIC said in its study: "Within the coming five years, the production of ethylene, for instance, will be concentrating in the Middle East", which will account for 20% of the global production "by 2010". But APS Energy Group says this may not happen.

The GCC Industrialists Conference, to discuss the state of the petrochemical industry in the region in the next 12 years, will no doubt hear some of the speakers warn that no one can predict what will happen tomorrow, let alone next year or the year after. Among the leading speakers will be economics Nobel Prize winner Joseph Stiglitz and Germany's former chancellor Gerhard Schroder. The conference seeks to highlight the growing importance of the industry as a provider of raw material and a creator of jobs in the region.

Saudi Aramco-SABIC Partnership: Saudi Arabia's two largest companies, state-owned Saudi Aramco and state-controlled Saudi Basic Industries Corp (SABIC), are negotiating multi-billion-dollar JV for oil refining and petrochemicals at Yanbu', on the kingdom's Red Sea coast. On Jan. 11, MEED noted that the two giants had "never worked together on such a scale before, and their relationship has long been characterised as competitive at best, and at worst fractious". But there are many potential synergies between the two.

As the largest oil company in the world, Saudi Aramco's has abundant oil and gas feedstocks, a long experience and the expertise to take the lead on the upgrade of the Yanbu' refinery. For SABIC, a top-five player in the world petrochemical market, the project would be a first into the refining business and its first involvement in the kingdom's oil-based petrochemicals. SABIC has grown rapidly after its acquisition of three oil-based foreign businesses since 2003, including its 2007 purchase of the GE Plastics in the US.

The two giants are following the lead of international oil companies (IOCs), which have been pursuing integrated projects for years. This, however, is a political move - reflecting the trend of resource nationalism sweeping through OPEC and other parts of the world including Russia. Despite rapidly rising project costs and the tightness of the contracting market, Saudi Aramco's downstream projects are still sufficiently attractive to allow the company to pick and choose its IOC partners. But, as with the upstream petroleum sector, Riyadh has always been keen to do whatever it can without external assistance. This partnership between two state-controlled companies could become a template for the future.