Table 25: Additional costs on petrochemical producers of higher feedstock prices Toss ah US Spot/(US$50/bbl) ui iy raised Ethane 950 1,411 461 Methane 201 457 256 Propane 3,918 4,898 980 Butane 789 986 197 Naphtha 2,348 2,934 587 Ammonia 64 132 69 Feedstock cost 8,269 10,819 2,550 Electricity & water 1,039 2,053 1,014 Total 9,309 12,872 3,564 Source: IHS Chemical, BofA Merrill Lynch Global Research. US spot refers to natural gas prices of US$2.6/mn BTU. The US$2.5bn feedstock price rise could directly accrue to the central government through Saudi Aramco, while higher electricity and water charges would not. Moving further down the value chain Downstream operations in Saudi have historically been international Joint-Ventures (JVs) and government-owned entities like SABIC. In July 1993, the government issued a Royal Decree that merged all the state-owned refineries, distribution activities and marketing operations under Saudi Aramco. This resulted in a transfer of the government’s stake in three key refineries and international refining and petrochemical operations to one state-owned company. Today, Saudi Aramco is one of the largest crude oil refiners in the world and aims to become a top-three petrochemical producer through standalone petrochemicals facilities like Sadara, downstream integration at its many refineries, and potential acquisitions. The recent announcement of the US split with Shell was followed by comments that the breakup was due to different strategies by both companies with Aramco increasing its focus on petrochemicals. Petrochemicals - a route to diversification Saudi Arabia is emerging as one of the largest petrochemicals producers globally. The country initially started with integrated refining leading to petrochemical production through its multiple JVs in Saudi and other regions, and is now building the largest petrochemical complex globally. One of the goals is to maximise the value of the Saudi hydrocarbon chain. Ultimately, this expansion