Two new cities embody Saudi bid for industrial power

At the site of an old village on the Gulf coast of Saudi Arabia, a place once known only to fishermen and pearl divers, the carefully planned new city of Al Jubayl is nearing completion.

Across the Arabian peninsula, around a small port that once served only pilgrims en route to Medina, is the equally carefully planned city of Yanbu. By the turn of the century, Al Jubayl is expected to have a population of 350,000; Yanbu 125,000. By then, the two names should be as well known in energy circles as Rotterdam and Houston are today.

Each city is being built with the goal of giving Saudi Arabia industrial strength in the oil-petrochemical field. Yanbu, connected to east coast oil fields by a new 1.8 million barrel-a-day trans-peninsula oil pipeline and a companion natural gas line, has the main task of allowing Saudi oil exports to be lifted from the more secure Red Sea coast - which is also much nearer to Western markets, thus reducing tanker-transport costs.

Al Jubayl is really the big brother of the pair. Here, 8of the 10 new Saudi petrochemical factories are located, capable of producing 2.3 million tons of chemicals a year (10 percent of Western Europe's consumption). Al Jubayl is industry-intensive, Yanbu export-intensive.

From the air, Al Jubayl looks as neat as an integrated circuit. Factories are arrayed in one zone, linked to the Gulf by a massive, three-channel, seawater cooling system. A new port and tank farm ride the seafront; a series of greening housing complexes lie to the north. All are resting on khaki desert sand, and are connected by a smart new complex of superhighways.

''I first came here in 1977, and there was nothing - just desert and marshland,'' project director Ahmad I. al-Mubarak recalls. ''Now we look around and see three plants in their first stage of start-up and others on the way. There's power, telecommunications, seawater cooling, and all the services - houses, schools, shops, mosques.''

In many ways this is the complete Saudi development project; 61 different nationalities are at work here. The master organization contract belongs to a Saudi-Bechtel Group Inc. partnership. The new neighborhoods (which will be integrated, with Saudi and non-Saudi residents alike) are as tidy and new as a set of north Dallas suburbs. Water is produced by a new series of seawater desalination plants powered by natural gas. And computerized drip irrigation is used to meter out the proper dose of the precious liquid to each tree, shrub, and patch of St. Augustine grass.

The goal here, as in so many other parts of the kingdom, is to ''Saudi-ize'' the work force one day, meaning to make Saudi nationals 60 percent of the population. This may not be accomplished easily, given the complexity of the operations at Al Jubayl amd the Saudi aversion to manual labor. But the Shiite Muslims of the Eastern Province may fill the bill, since they have a tradition of employment not easily found elsewhere in the kingdom. It seems likely that Saudi Sunni Muslims will end up as a managerial class. Some 1,000 Saudis a year are to soon be graduating from an on-site technical-training center.

An American economist in the kingdom notes: ''The project is not just spending money to make money through development. It also is going to provide skilled occupations for the population. Thus, it is a strong force for modernism in this country.''

Developers, under the auspices of the Royal Commission for Al Jubayl and Yanbu, are trying to interest Saudis in taking advantage of the cheap energy, ready-made infrastructure, and low land costs to undertake business ventures here. With the heavy petrochemical plants already nearing start-up, attention is turning to promotion of ''downstream'' industries in plastics, fuel additives, and pharmaceuticals. There also is great need for makers of consumer goods, for residential developers, and for community-service enterprises.

In some cases, the royal commission is ''seeding'' development. For instance , it contracted 2,000 of the Al Jubayl dwelling units in order to encourage Saudis to bid for the remaining 48,000 needed. The commission also has put in a 30-store shopping mall for the same purpose.

What the royal commission has done so far, an official says, is to ''create a healthy supply and demand situation'' for housing and community services. ''We've been trying to prevent a lag,'' he says, ''and it's been interesting to note that the Saudi private sector has caught on and is coming in - not too late , not too early.''

Much remains to be done in Al Jubayl. World oil and petrochemical prices may cause a slowdown in activities for a time, Saudi and Western economists say. But the plan to site an industrial city with all the conveniences of the 20th century near the world's largest known concentration of oil reserves seems to be sound.

Meanwhile, construction activity continues apace. Like Mr. Mubarak, Badr Habidi, public affairs director, recalls the early days as a ''pioneer'' at Al Jubayl. ''In 1978, when the King was here for the inauguration of the city, even he had to stay in a single trailer,'' he says. Now there are swimming pools, tennis courts, libraries, and villas for kings and other visiting guests.

''There's no project like this in the world,'' says Mr. Habidi. ''I've watched the birth of a new industrial city.''