Oil and petrochemical development planned or under way in the Middle East, particularly in Saudi Arabia, is “just enormous,” said Larry Weischwill, senior vice president of the Americas for Agility Project Logistics. S.I. Mustafa, vice president of logistics with Dammam-based Almajdouie Group, a specialist in land-based heavy-lift transport, agreed. For example, Jubail 3, the latest project at the gigantic petrochemical complex in the Arabian Gulf in eastern Saudi Arabia, will eventually mean more than 1 million freight tons of cargo, he said. Another project, at the Kursaniya Gas Plant 35 miles north, is expected to generate some 600,000 freight tons of cargo. These are just two of the many projects that will keep heavy-lift shippers and carriers in the region busy. However, Mustafa estimated all cargo has fallen by 19 percent and that project cargo has plunged at least 50 percent in the region. After handling some 2 million tons of project cargo in 2007, Almajdouie's volume slipped to 1.6 million tons last year. In 2009, Mustafa said the group will handle about 600,000 tons. Although refinery and petrochemical project owners backed off in a hurry when the price of oil fell to $30 a barrel last year, now that it is back up to break-even levels, pure economic risk is not what is slowing regional projects. The slowdowns are primarily due to principals taking advantage of falling materials prices and lower demand for project services from the rest of the world to renegotiate with their equipment suppliers, engineering contractors and other supply chain interests. But the projects themselves haven't gone anywhere. Saudi Basic Industries Corp., one of the world's five largest petrochemical manufacturers, is the primary mover in many of the massive projects that Agility is involved with, Weischwill said. SABIC, 70 percent of which is owned by the Saudi government, has major operations in the industrial city of Jubail, Dammam in the Arabian Gulf, and at Yanbu, near the Red Sea coast. In 2008, SABIC produced 56 million metric tons of petrochemical products; by 2020, it expects to produce 135 million metric tons annually. Hence the enormous scale of its development plans. SABIC typically forms joint ventures with interested companies to develop a given project and bid the engineering, production and construction work to the EPC firms that build the complexes, Weischwill said. Preliminary studies, called front-end engineering or FEED contracts, are awarded first.
