Petrochemicals in the Development Strategies of Saudi Arabia and the United Arab Emirates

The aim of the study is to analyze the part that the Gulf countries – Saudi Arabia and the United Arab Emirates (UAE) – play in the global petrochemical industry. Petrochemistry remains one of the main factors of global economic growth, what opens up significant prospects for the development of this industry for countries with an extensive and cost-competitive resource base. For the two critically dependent on the production and export of crude oil countries, the development of petrochemicals is an expectable choice, both in terms of diversifying the production structure and commodity exports, and in terms of increasing the sustainability and global competitiveness of national companies. The article analyses the dynamics of production and export of petrochemical products from Saudi Arabia and the UAE. It’s argued that both countries orient towards external demand and export petrochemical products mainly to developing countries. The national petrochemical companies of the UAE and Saudi Arabia, primarily Saudi SABIC, are among the world’s leading petrochemical concerns. Internationalization has become a key direction of their corporate strategies. On the one hand, Gulf petrochemical companies are forming joint ventures and developing partnerships with Western petrochemical concerns. On the other hand, they have stepped up their participation in the construction of new production facilities in countries with rapidly growing demand for petrochemical products, China and India. The internationalization strategy is subordinated to the solution of two main tasks. Firstly, petrochemical complexes created in the Asia-Pacific region with the participation of Saudi and Emirati companies allow oil-producing companies of the two countries to conclude long-term contracts for oil export. Secondly, these projects open direct access to local markets. As China and other major Asia-Pacific countries increasingly seek to localize their petrochemical production, internationalization is becoming the only way for Saudi and Emirati companies to maintain and expand their market niches. A qualitative breakthrough in this direction was the UAE’s decision to create a new, very large, transnational petrochemical company of global significance with the Austrian company OMV. Development of petrochemistry inevitably leads to an increase in greenhouse gas emissions. Nonetheless, choosing between the task of maintaining high economic dynamics and the imperatives of decarbonization, both Saudi Arabia and the UAE have made a choice in favor of an economic growth.