Dec. 14 (Bloomberg) -- Saudi Arabia may double prices next year for natural-gas feedstock used by local petrochemical producers, Saudi investment bank NCB Capital said.
Buyers including Saudi Basic Industries Corp., the world’s largest petrochemical maker known as Sabic, might need to pay $1.50 per million British thermal units for ethane gas compared with the current ethane price of 75 cents per million BTU, NCB said today in an e-mailed report.
Saudi Arabia sells feedstock gas at subsidized prices to help domestic industries. The subsidies have led to accusations of price-dumping from European countries, India, and China, which argue that ethane and methane cost less in Saudi Arabia than elsewhere.
“Saudi petrochemical firms procure natural gas at one of the lowest prices globally,” NCB said.
The Saudi government set the price for natural gas at 75 cents per million BTU in 1998, said NCB, the investment arm of Saudi Arabia’s largest bank by assets. Gas prices in the U.S. and China this year have averaged about $3.50 to $4.50 per million BTU, it said.
Saudi Arabian Oil Co., or Saudi Aramco, aims to increase gas output to 15.5 billion standard cubic feet per day by 2015 from 9.4 billion in 2010. Even so, NCB said it expects demand to outpace supply.
Producers “are facing difficulty” getting allocations of ethane at the subsidized price due to increasing domestic gas consumption, it said.
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