Saudi Basic Industries Corp. (SABIC) is rumoured to invest US$5 bln in Iraq as domestic competition for energy coerces the company to search for cheap gas in riskier Mideast locations. Rising gas consumption in Saudi Arabia is putting Sabic increasingly under pressure to invest outside the kingdom. Sabic is in talks with Iraq's government to build a new factory to produce polyethylene and polyvinyl chloride. With this decision, Sabic could join companies like Royal Dutch Shell, Dow Chemical Co and Total who are mulling a major investment in Iraq amid ongoing political uncertainty and violence in the country. Companies are being lured into the country with access to each vast and cheap natural resources in return for investment as it struggles to rebuild its shattered economy.
No confirmation was received from Sabic officials about talks on this project. Between 2005 and 2030, Saudi gas consumption is forecast to rise at least threefold to 14.5bn cu ft/day, partly driven by rising petrochemical requirements.
Pressure on gas supplies also comes from other industrial projects such as aluminum smelters as well as the annual population growth rates above 2.2%, which makes it harder for Sabic to secure resources for expansion.