Domestic demand is helping Saudi Basic Industries Corp (SABIC) cope better than other petrochemical companies with a global recession.
However, an oil price at US$70-75 was necessary to help the kingdom sustain investments in petrochemicals- to fund a US$400 billion public spending spree for the next 5 years. SABIC is currently executing projects in the kingdom to the tune of 12 billion Saudi riyals (US$3.20 bln) that aim to add 623,000 tpa to its overall capacity. SABIC recorded a worse-than-expected loss in Q1, taken a hit from a downturn in prices for petrochemicals and metals. Saudi Arabia, which relies on oil export revenues for more than 80% of total state revenues, is expecting its first budget deficit in years in 2009 as it keeps spending high.