Saudis erecting key industrial city in 'dunedocks'

In the early 1970s it was just a backwater Arabian Gulf fishing town with a population of 8,000 and not much more than sand dunes and salt flats to the south, west and north. Today, Al Jubayl is fast on its way to becoming one of Saudi Arabia's major industrial cities.

Perhaps only in Saudi Arabia, where 1980 oil revenues are estimated to have exceeded $100 billion, could a government undertake to construct an entire industrial city from scratch.

Jubayl industrial city, a planned complex of 80 square kilometers (32 square miles) of primary and secondary industries complete with an airport, seaport, 500 kilometers (320 miles) of roads, and a residential area to house 373,000, is rising from the desert north of old Jubayl to assist the government in squeezing every last riyal out of each barrel of Saudi crude.

The concept was the dream and vision of the late King Faisal, who advocated rapid industrialization and a plan to better utilize natural gas associated with crude oil production. These gases had been flared for years.

Under the government program, the associated gases -- methane, ethane, butane , propane, and natural gasoline -- will be collected and used as fuel, for desalination plants, power generation and industries, and as feedstock for petrochemical complexes. In addition, butane, propane, and natural gasoline will be exported.

Specifically, the gas program will supply Jubayl with methane for a 500,000 -ton-a-year fertilizer plant and two methanol plants each with 650,000 -ton-a-year capacity; and ethane for four planned ethylene and polyethylene plants with production ranging from 260,000 tons per year to 656,000 tons.

A steel mill is also planned to take advantage of cheap and abundant gas as fuel for its expected production of 850,000 tons a year.

Plans also call for construction of three large export oil refineries.

After these so-called industries are established, expected to go on stream in the mid-'80s, the government's Ministry of Industry and Electricity will oversee private development of manufacturing and fabricating facilities for plastics and steel products into consumer goods.

A government study has identified 120 types of industries that could be built in the industrial city in the next 20 years.

But there is more to Saudis' planning than just developing infrastructure and facilities to diversify the industrial base. The Saudis are placing a very high priority on development of qualified Saudi professionals and Saudi technicians to eventually take over the operation of the huge industrial facilities to be built by such multinationals as Shell Oil, Mobil Oil, Dow Chemical, Mitsubishi, and others in joint ventures with the government.

Government targets call for a 25 percent Saudi staff when petrochemical plants begin production and a boost in the proportion of Saudis to 75 percent within the first five years of operation. Estimates are that 20,000 workers will be needed to run the petrochemical facilities.

One section of the planned city will contain a training center. It is expected to graduate 1,000 technicians a year by the mid''80s. The government is also sponsoring several other training and education programs, some of which will take students to the United States, West Germany, and Japan to study.

In addition to Jubayl, a scaled-down version of the industrial city is being constructed on the Red Sea cost near Yanbu. The Yanbu project will be linked to the oil fields of the Eastern Province by 700-mile, parallel crude and NGL (natural-gas liquids) pipelines. It will include a 450,000-ton-per- year ethylene petrochemical plant, a 250,000-barrel-a-day export oil refinery, and facilities to export propane, butane, natural gasoline, and crude oil from the Red Sea port.

As enticement for foreign companies to bring their capital, technology, and marketing expertise to Saudi Arabia, the government has made available soft loans, cheap fuels, and cheap raw material feedstocks. Some of the government's joint-venture partners are also receiving guarantees for 15 years' access to quantities of the relatively inexpensive Saudi crude. They will be entitled to lift 500 barrels a day for each $1 million invested in their projects w hen the plants become operational.