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Presentation
of the Eastern Province
In 2016, the
eastern province has about 4.6 million inhabitants, or 15% of the Kingdom's
population, two-thirds of which are concentrated in the Dammam-Dhahran-Al
Khobar conurbation.
Until the
discovery of oil deposits, the population, concentrated in the coastal area,
lived mainly fishing, pearl oysters and large palm groves (Qatif and Hofuf).
The region is
the first in the country by its energy resources and industry, driven by
petrochemicals, chemicals and metallurgy.
The large
Saudi private groups in the eastern province are often from former Saudi Aramco
who benefited from training and Anglo-Saxon standards.
These groups,
which sometimes form conglomerates of about ten branches, are now active in the
Gulf, the Middle East and Asia.
The local
development of the mining company Ma'aden, should participate in strengthening
the industrial leadership of the region.
EMBASSY OF
FRANCE IN SAUDI ARABIA
ECONOMIC
SERVICE
General File
Province Orientale
Saudi Arabia
First
industrial region of the Kingdom
The eastern
province counts
2016 nearly
4.6 million
inhabitants,
ie 15% of the
population of
the Kingdom, and
two-thirds
are concentrated
in the Dammam
conurbation -
Dhahran - Al
Khobar.
Until the
discovery of
oil fields,
the
population,
concentrated on
coastal area,
lived
mainly
fishing,
pearl oysters
and large
palm groves
(Qatif and Hofuf).
The region is
the first of
country by
its resources
energy and
industry,
driven by
petrochemicals, the
chemistry and
metallurgy.
Large private
groups
Saudi of East
Province
are often
from ex-Aramco
Saudis who
benefited from the
training and
standards
Anglo-Saxon.
These groups,
which sometimes form
conglomerates
of about ten
branches are
today
active in the
Gulf, Middle East
and in Asia
Local
development of the
mining
company Ma'aden,
should
participate in strengthening the
industrial
leadership of the
region.
Other data
from the province
Eastern:
Governor:
Prince Saud bin
Nayef (nephew
of the current king)
Located along
the Arabian Gulf, the eastern province extends from Kuwait to
Oman and has
common borders with the United Arab Emirates, the
Qatar and
Bahrain. This vast territory of 778 500 km² represents more than a third
of the
country's surface, and can be broken down into two parts: the region
where the
population and industry are concentrated, and the Rub al Khali - "the
"empty
quarter" - considered as the largest sand desert in the world.
The Province
is best known as the first region of the country by its
energy
resources, oil and gas. The first oil deposits have
was
discovered in 1933 in the Dhahran area by the company
American
Standard Oil of California. This deposit of Ghawar has revealed itself
later to be
the largest in the world. Its exploitation and that of the fields
neighbors
gave rise, in 1944, to the creation of the company ARAMCO,
became the
current SAUDI ARAMCO after nationalization in 1988. The
Rub al Khali
region also has hydrocarbon reserves, of which
the
exploration was entrusted to Western majors (Exxon, Shell, Total)
in the decade
of 2000. Few concessions have proved to be exploitable, the
desert
concentrates the majority of the country's gas reservoirs.
Eastern Province also hosts the biggest
activity
Arabia and the Arabian Gulf. Its development
was
accelerated under a double impulse:
The petrochemical industry emerged from 1975
with the creation of
the industrial zone of Jubail about a hundred
kilometers north of
Dammam, entrusted to a royal commission
(RCJY), then of SABIC (Saudi
Basic Industries Corp.), a public company
focused on the transformation of
hydrocarbons. basic and intermediate
chemicals, as well as
products of the iron and steel industry.
A real private sector appeared in parallel
with public groups
since the 1950s, carried by a generation of
businessmen
Saudi Arabian workers most often worked at
ARAMCO and acquired
in contact with the American engineers of the
oil company a culture
industrial and commercial. Thanks to this
training, families
traders have created their own service
company to serve and
supply the oil company. Some of these Saudi
founders
are now among the richest men in the world
...
Let's add the recent emergence of a 3
the engine of industrial growth,
with the development and diversification of
the national mining operator
Ma'aden. It underlines the Saudi desire to
value the production of
minerals and precious metals to make this
sector a new engine
of the country's economy in a context of
declining oil prices since
summer 2014. Indeed, the Kingdom has
considerable resources
estimated at 20 MT of gold or precious metals
and 60 MT of copper. A potential
proved exists for the exploitation of bauxite
and zinc. The first
- 2 -
Religion: Sunni Islam in
majority ; but the coastal region
also houses the main
Shia communities of the country
(10% of the population
Saudi).
country's integrated megaproject in this
sector, named Ras El Kheir, is located in
200 km north of Al Khobar, and includes a
port dedicated to the export of
minerals. Processing activities (ammonia,
phosphates) are
also developed.
To the industrial enterprises, which form the
economic heart of the
province. it is appropriate to add the
companies of the various activities of
services, including geophysical research, oil
and gas
petrochemical, computer. It is in the
services that the region counts the
more expatriates with "high added
value".
French presence
There are 840 French in the
Eastern Province, including 140 in Jubail,
the
remains in Khobar, Dhahran,
Dammam and some exteriors.
(figures 2017)
French companies whose
the head office is based in
Eastern Province are:
TECHNIP
TOTAL
CGG-VERITAS
SAINT GOBAIN - BRIDGE A
VINCI ENERGY
ALCATEL
VALLOUREC
Rhodia / Solvay
CIS
Saur
About one hundred French companies are active
in the East province. The
most of them have their main representation
in Riyadh or Jeddah.
Assets are logically concentrated in the
energy and
the petrochemical industry with Total, CGG
Véritas, Technip, Vallourec, but
also in the desalination of seawater
including Jubail with Saur.
Several missions were organized by Riyadh
post through Business
France and the Economic Service in particular
a ministerial visit in 2015,
business meetings with Saudi Aramco in
November 2014, with
Ma'aden in April 2014.
The province is a reflection of the policy of
the Saudi authorities to
diversify the industrial fabric in order to
solve the problem of unemployment of the
Saudi youth. Initiatives for setting up poles
of technological excellence are of interest
to French companies. These
"Techno-valleys" already have the
presence of Veolia and other groups
hexagonals study the possibility of
integrating them.
Moreover, in the perspective of the
development in Saudi of the energies
renewable and cleantech (carbon capture,
smart urban management),
French leaders in these sectors intend to
develop partnerships
with local businesses and public institutions
(Royal Commission
for Jubail and Yanbu, Aramco and Sabic) to
seize opportunities
proposed by the latter and the Saudi
authorities.
- 3 -
1 www.saudiaramco.com
SAUDI ARAMCO:
By 2030, Saudi Aramco has
announced the increase of its
gas production to move to
23 Mdp3
/ d, a doubling of
abilities accordingly by
compared to 12 Mdp3
/ j in 2016.
The kingdom will begin
shale gas production
2020. At first 20
M p3 will be allocated to society
Ma'aden to develop the "
Wa'ad Al Shamal Project ".
The Saudi oil ministry
provides for a production of
shale of 500 million p3 in
2020 and 4 billion p3 on the horizon
2025.
The Saudi oil company occupies the 1
world rank in terms of
oil reserves: it has 25% of known world
reserves.
Here are its main features1
:
Crude oil
reserves in 2016: 261 billion barrels
Natural gas
reserves in 2016: 292 trillion p
3
(associated and not associated)
Crude
production in 2016: about 10.2 M barrels / day
Gas
production in 2014: 9.8 trillion Btu / d
(ie 9.8 billion p
3
/ j), of which 1.4
trillion Btu / day of ethane gas (ie 1.4
billion p
3
/ Day).
Production
of refined products in 2014: 561 million barrels
Turnover:
not published. The oil company recovers 10%
Saudi oil revenues. According to our
estimates, recipes
Kingdom's oil companies amounted to nearly
248 billion in 2014
USD.
Area of activity: all stages of hydrocarbon
production,
from exploration to distribution, geological
research,
oil and gas exploitation, refining, storage,
transportation (oil and gas pipelines
shipping company), distribution and
logistics, as well as research
and environmental protection.
Following the crisis of 2009, Saudi Aramco's
strategy turned towards
Asian markets. Faced with the decline in
crude prices since the summer
2014, Saudi Arabia chose to pursue a policy
of defending its
market shares. Among the countries of the
Middle East, Saudi Arabia remains the
first supplier of crude from Asian countries,
with the exception of Taiwan and
from Singapore where it has seen its market
share shrink. This represents
about 33% of 2016 crude oil imports from
Japan, Korea
South and Taiwan, 16% of Chinese imports and
21% of
Indian imports.
The recent American rise in the exploitation
of
unconventional hydrocarbons associated with
record Russian production,
party responsible for falling barrel prices,
and possible self-sufficiency
2020 announced by the IEA puts pressure on
Saudi petrochemists. The historical
comparative advantage of good access
hydrocarbon market is in competition with
large-scale production
scale and profitable shale gas in the United
States. China, first customer
of the petrochemical industry of the Kingdom
also intends to develop its
potential in oil and would require Sabic and
his sisters to find
new markets for its products.
Baker Hughes Incorporated (BHI) Study Shows
Saudi Arabia
Arabia would hold unconventional gas reserves
(shale gas)
estimated at 645 trillion p
3
(645 Tp3
), which would place the Kingdom at
fifth in the world after China, the United
States, Argentina and
Mexico. The plan launched by Aramco provides
for the use of
unconventional gas by 2020. This perspective
would
new momentum for the sector for longer
visibility in terms
low cost supply.
SABIC - Saudi Basic Industries Corp.
Saudi petrochemicals came into being in 1975
with the creation of the Royal
SABIC currently has
several research centers
particularly in Riyadh, Houston and
Vadodara (India). These centers
employ 2000 scientists,
researchers or technicians. The
search is more
particularly concentrated
in the field of polymers
and basic chemistry.
Commission for Jubail and Yanbu "(RCJY),
aimed at providing the country with a
competitive industry. The effort of the Saudi
public authorities continued
the following year with the creation of the
Saudi Basic Industries Corporation
(SABIC) whose object is to transform
resources
kingdoms in petrochemicals, resins and
plastics,
fertilizers and metals. From 1979 to 1989
fourteen petrochemical subsidiaries of the
SABIC will go into production, creating the
basics of petrochemicals
Saudi.
SABIC no longer holds the monopoly on the
sector, and coexists
now with a vibrant private sector and the
Saudi government
invites investors to take an interest in the
petrochemical sector. This call to
investors seems to have been heard abroad, in
particular by the
Chevron company behind the first
petrochemical project
completely private in Saudi Arabia, and by
several new companies
associating different groups from Saudi
Arabia or from the Gulf.
Saudi petrochemical companies have an
advantage
major comparative: the price of raw
materials. With its considerable
reserves of crude oil (261 billion barrels)
and natural gas (292 TCF), the
The Saudi government (via Saudi Aramco)
managed to concede
Saudi petrochemical companies a selling price
of 0.75 USD per
million BTU, compared to a global standard
(spot market price)
currently around 5 USD. This grant is to be
gradually attenuated
The support of the Government of Saudi Arabia
is not limited to the subsidy of
price of natural gas, water and electricity
for the actors of the
petrochemicals but also includes a set of
fiscal measures
attracting foreign and local investment. For
example,
example, the strong presence of Exxon Mobil,
Chevron Philips, Total, or
SINOPEC, whose investments in the sector have
contributed to
Saudi Arabia is the largest petrochemical
producer in the Middle East.
- 2014 production: 69.7 million tons
- Capital controlled 70% by the State and 30%
by private shareholders
Saudi or Gulf Cooperation Council countries
- 2014 revenue: USD 50.2 billion
- Net profits 2014: 6.2 billion USD
- SABIC is in the top 10 global petrochemical
groups, 4
th
global producer
- Number of employees: 40,000 (all
subsidiaries combined).
SABIC, after purchasing in 2007 a unit of
General Electric Co.
plastics for USD 11.6bn, said in April 2014
to want to develop its
activity in China and the United States given
the difficulties in
the company grow in Saudi Arabia due to a
shortage of gas.
Sabic has also shown interest in increasing
investment in
shale gas projects, particularly in the
United States, on the one hand by signing
mid-2015 an agreement with the American
company Enterprise Products Partners
L.P for a supply of shale gas, and secondly
getting involved in the construction of a
hydraulic fracturing plant so
to take advantage of the American momentum.
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