Dow has a longstanding commercial presence in Saudi Arabia that includes several major joint ventures and billions of dollars in investments. How has Dow’s business relationship with Saudi Arabia evolved, particularly over the past decade?
Dow has longstanding ties to the region, and to Saudi Arabia in particular. We have been present in Saudi Arabia since 1976, entering the market through distribution partnerships. Today, Dow is one of the largest foreign investors in the country’s petrochemical sector.
Moosa Al Moosa, President, Dow Saudi Arabia
The Sadara Chemical Company, which was established in 2011 as a joint venture between Saudi Aramco and Dow, is the world’s largest integrated chemical facility and the largest ever built in a single phase. It reached full commercial operation in 2017. This partnership, and the tremendous impact it has in the community through job creation and engagement, and overall support to domestic manufacturing, are a testament to Dow’s unwavering commitment to the Kingdom.
In 2016, Dow became the first international company to receive a trading license from the government of Saudi Arabia, allowing 100 percent ownership in the country’s trading sector. This next phase of partnership expands Dow’s local engagement through delivering high-value, innovative products in the areas of sustainable development, energy-efficiency, oil and gas, alternative energy and water, and all in support of Vision 2030. Dow works as a strategic partner to customers across the Kingdom, supporting not only with chemical inputs but technical expertise to innovate.
In 2018, Dow became a founding member of the KAUST Industrial Collaboration Program, which helps commercialize research into practical applications. The Dow Middle East Innovation Center “MEIC’’ is located at KAUST and develops innovative, science-based solutions for modern-day challenges in the energy, energy efficiency, and infrastructure industries. Most importantly, the Center creates an opportunity for Saudi students to develop hands-on critical expertise to build meaningful careers. Dow supports the University’s vision to drive economic development by investing in R&D with strategic relevance to the Saudi market. Within the MEIC is the Digital Marketplace Center “DMC,’’ which innovates digital solutions to support regional growth while enhancing customer experience. Through these various partnerships, joint ventures, and investments, it is clear that Dow supports the Kingdom’s diversification objectives while also ensuring the development of local capabilities and talent. From 2017 to 2022, Dow Saudi Arabia has received certification from the Top Employers Institute—the global authority on recognizing excellence in people practices—as one of the ‘best places to work.’
The Sadara Chemical Company joint venture between Saudi Aramco and Dow represents the largest ever joint venture in the Kingdom’s petrochemical sector. How has Sadara and related projects such as the PlasChem Park in Jubail impacted the competitiveness of Saudi Arabia’s petrochemical sector?
Saudi Arabia has been focused on increasing its share in the global petrochemicals market for decades. The industry is of vital importance to the country’s economy. In terms of value, chemical products were amongst the most important non-oil exports in the first quarter of 2022, comprising 34.2 percent of total non-oil merchandise exports. From a global standpoint, Saudi Arabia is an important player in both ethylene and ethylene derivatives, accounting for approximately 9 percent of the world’s ethylene production capacity. The Sadara Chemical Company is one such example of how the Kingdom is prioritizing steady organic growth through new domestic projects and expansions. As the world’s largest integrated chemicals complex built in a single phase, it produces more than 3 million mt/year of high value plastics and chemical products.
The investment has brought new technologies to the Kingdom and generated high quality jobs through building technical expertise to a new generation of the workforce. Prior to the completion of Sadara, Dow had trained over a thousand Saudi nationals at different sites and facilities worldwide. Sadara is also a critical component of developing local raw materials and chemical inputs that are part of value-creation for downstream manufacturing – turning intermediate products into lightweight auto parts, recyclable food packaging and energy efficient building & coating materials.
How does Dow see its role in expanding localization over the next decade, in line with objectives such as the Industrial Cluster program or Saudi Aramco’s in-Kingdom Total Value Add (IKTVA) initiative?
Earlier in July this year, Dow and the Al-Hejailan Group signed a Memorandum of Understanding (MoU) to form a joint venture to design, build and operate a methyl diethanolamine (MDEA) plant in the PlasChem Park in Jubail, Kingdom of Saudi Arabia. The joint venture will enable Dow and Al-Hejailan to meet growing demand for natural gas purification in Saudi Arabia and in the broader Middle East region. In addition to the joint venture, Dow will also build a Dow-owned downstream manufacturing facility which will source raw materials from the new JV. This new facility will expand capacity of the Company’s MDEA-based high performance UCARSOL™ products and will also blend Dow’s ACCUTRACE™ fuel markers for the region. This investment will position Dow to further enable local solutions for the energy transition, including delivery of industry leading gas treating, carbon capture, and fuel additive technology to the region. The facility is expected to come online in late 2024.
How has domestic chemical R&D within Saudi Arabia progressed in recent years? What role does Dow play in R&D and knowledge transfer in the Saudi petrochemical industry?
Earlier this year, Saudi Arabia’s H.R.H. Crown Prince Mohammed bin Salman Al Saud launched a new program for the research, development and innovation (RDI) sector which aims to add $16 billion to the country’s GDP by 2040. Given that chemical products are amongst the most important non-oil exports, we can expect that boosting R&D in this sector will be a major focus for the Kingdom going forward.
In launching the Dow Middle East Innovation Center at King Abdullah University of Science and Technology (KAUST) in 2018, Dow has demonstrated its commitment to promoting localized research and providing advanced digital solutions within the Kingdom. The Center, which was LEED certified earlier this year, houses our Digital Marketplace Center and our R&D facilities. The Center utilizes technologies to develop and test scientific applications for customers allowing them to virtually pilot solutions from sustainable coating to oil and gas technology solutions for energy efficiency. By leveraging technology, Dow is supporting Saudi customers to develop and commercialize key applications rapidly for the growing consumer market. Beyond providing research and innovation, the Center also serves as a hub for direct knowledge exchange and talent development between KAUST and Dow. Through mutual collaboration including internships and research experience for KAUST students, postdocs and researchers, to opportunities for further academic pursuits and training of Dow’s employees, the Center will be key in continuing to shape and drive Saudi Arabia’s intellectual ecosystem.
In addition to the innovation center, Dow has engaged in several partnerships with notable local entities to launch numerous initiatives and innovative solutions in the past three years. These solutions allow for industrial diversification and R&D acceleration in the following strategic fields:
- Renewable energy
- Recyclable initiative for plastics (Paving roads with recyclable plastic)
- Water desalination
- Coatings and constructions polymers
- Insulations and energy efficiency
What market factors will have the biggest impact on the Kingdom’s downstream sector over the next five years?
Market factors poised to support developments over the coming decades are growth in the area of renewables, sustainability, decarbonization and infrastructure. Saudi Arabia has committed to have 50 percent of its power come from renewable sources by 2030 and to reach net zero by 2060. As such, we can expect petrochemical players in Saudi Arabia and around the world to increasingly prioritize sustainability measures in the years to come. While there are various roads to increased sustainability, they can each bring about substantial value-creating opportunities, including premium pricing for sustainable materials and access to high-growth, high-margin markets.
