The state of the Saudi petrochemicals sector

Saudi Arabia

Mutlaq Al Morished, CEO of Tasnee, talks to The Energy Year about the company’s growth expectations in the coming years and the current performance of the petrochemicals sector. Tasnee is a Saudi company involved in industrial services, environmental technologies and the manufacturing of petrochemicals, chemicals, plastics and metals.

This article is featured in The Energy Year Saudi Arabia 2023

What is Tasnee’s growth expectation for the coming years?
Petrochemicals are our core business. Around, chemicals consumption is growing. It will go through cycles, but on average, it’s still a profitable business. In a nutshell, we want to double our revenue by 2030 and offer the highest return on invested capital among Saudi petrochemicals companies by 2026.

Please describe the current performance of the petrochemicals sector.
The first half of 2022 was great for everybody in the commodity business. The second half was more difficult. It looks like the first half of 2023 will be like the second half of 2022, and the industrial sector in general, including the petrochemical industry, is looking for an improvement. However, massive changes shouldn’t be expected. It’s going to be a gradual increase in most commodities, including petrochemicals.
It’s just part of the cycle. The chemicals industry is forever going through cycles. We went through it in the ‘80s, ‘90s and 2000s. It is nothing new. Nobody is going to be changing their strategies just because of the cyclical nature of the market.

What are the risks of nations pushing the energy transition above its natural speed?
We’ve seen what happened when Europe tried to completely get rid of fossil fuels. We also saw how much coal was burned in 2022, mostly in Europe.
You have to be careful with electric cars, which are not the panacea. Lithium for batteries is produced by scraping the surface of the earth, with huge, diesel-burning excavators and tractors.

How important is the carbon circular economy for reaching net zero?
The industry needs incentives and time for adjustment. For instance, we recycle the polypropylene and the lead in car batteries. We have been recycling them for the last 30 years. The chemicals industry also has plenty of recycling initiatives. People do it when they can profit from it. The issue with recycled plastic is that customers unfortunately will always pay attention to price, and recycled plastic is more expensive than non-recycled plastic.
However, it’s important to note that in nature, achieving net zero is not possible. There will always be at least some emissions.
In general terms, the petrochemicals industry has always been cleaner compared to other processes that use oil. If you’re looking scientifically at the volume of the greenhouse gases generated by converting oil into chemicals versus burning oil as fuel for trucks, trains and cars, you will find that crude going into chemicals is much better for the environment, as it has a much smaller carbon footprint.

Read our latest insights on:

• Saudi Arabia