Middle East powers ahead with new petrochemicals investments as Europe consolidates

This content is part of the WPC 2025 series, where we explore key themes from the 40th annual World Petrochemical Conference.

The petrochemical sector in the Middle East is accelerating expansion plans despite ongoing global oversupply pressures, with Saudi Arabia and the UAE each unveiling major new projects and acquisitions in the last few weeks. Qatar is also progressing its own investments, underscoring the region's drive to capitalize on competitively priced feedstocks and future demand growth.

Saudi Arabia: Two mega-projects

• Tasnee National Industrialization Co. plans a new petrochemical complex in Jubail with a capacity of up to 3.3 million mt/year, including a world-scale ethylene cracker and downstream units for polyethylene (PE), MTBE, and specialty chemicals. The company targets a late-2030 start-up, pending completion of feasibility and engineering studies.
• Sahara International Petrochemical Co. and LyondellBasell aim to form a joint venture to develop a similarly sized mixed-feed cracker and derivatives complex in Jubail. Preliminary plans call for 1.5 million mt/year of ethylene and 1.8 million mt/year of high-value polymer products. Feedstock approval from Saudi Arabia's energy ministry paves the way for a full feasibility review.

These announcements come despite a challenging global market marked by weak derivatives demand and rising competition from new Chinese capacity. Saudi Arabian producers, however, benefit from cost-advantaged ethane and propane, a core pillar of the kingdom's Vision 2030 strategy to diversify its economy and strengthen downstream value chains.

UAE: Borouge Group International in making

In a separate move, Abu Dhabi National Oil Company and OMV unveiled plans to combine Borouge plc and Borealis AG into a new entity called Borouge Group International by the first quarter of 2026. As part of the agreement, ADNOC will acquire North American polyethylene producer Nova Chemicals for $13.4 billion.

Once Borouge-4 is fully reintegrated, Borouge Group International will become the world's fourth-largest polyolefins producer with a total nameplate capacity of 13.6 million mt/year across Europe, the Middle East, and North America. The group expects to unlock $500 million in operational synergies and achieve an annual EBITDA of more than $7 billion, supported by a strong commitment to sustainable production goals through 2050.

Driving growth amid global headwinds

Collectively, the new Middle East projects demonstrate a clear ambition to capture market share and secure long-term returns, even though weak demand and a persistent supply overhang have weighed on petrochemical margins worldwide. Producers in the Gulf maintain structural advantages through integrated operations, low-cost feedstocks, and proximity to Asian and African growth markets.

European consolidation

The landscape of the European petrochemical industry has been a worry for most participants in recent years, with uncertainty spiking significantly over the last 11 months.

"We are all in very bad shape. The Shell announcement [of asset put up for sale] is causing a panic environment. [There is a lot] of uncertainty around where this will lead," an ethylene consumer said.

Multiple announcements on consolidation of assets in the European markets had been divulged amid significant and persistent economic weakness being faced within Europe. Most players who have announced closures or idling of assets, are players with global footprints, but the weakness of the European economy and markets had made the region the clearer option for consolidation.

• ExxonMobil rationalisation of assets located in Gravenchon, France.
• Sabic closure of one steam cracker located in Geleen, the Netherlands.
• LyondellBassel's conducting of a strategic review of some European assets.
• Versalis closure of two steam crackers respectively located in Priolo and Brindisi, Italy.
• Dow idling the LCH3 cracker from June 2025 onwards due to economic weakness.
• BP putting up assets located in Gelsenkirchen, Germany, for sale.
• Sasol's mothballing of plants in Germany and Italy.
• Shell's evaluation of the potential sale of chemical assets in Europe and the United States.

Under these multiple consolidation events as listed above, the future of the European petrochemical industry has been mostly uncertain and volatile, with players having short-term forecasts for business and weak economic indicators of a recovery any time soon.

The developments in the Middle East and China have caused some worry for European players who continue to watch those regions closely. The newer capacity closes the market share that European players had previously had and now raises further questions about global overcapacity despite efforts to optimize by closing European assets.

Despite mixed market signals, Middle Eastern players are pressing ahead with multi-billion-dollar investments across the GCC petrochemicals landscape. As Europe's industry moves toward consolidation, Middle East producers appear poised to reinforce their global position and meet the long-term demand for energy and chemicals—even against a backdrop of near-term oversupply.