KSA Industrial Gases Market Outlook to 2030

KSA Industrial Gases Market Overview

• The KSA industrial gases market is valued at USD 1.5 billion, primarily driven by the booming oil & gas, chemical, and manufacturing sectors. The growing demand for gases like hydrogen, oxygen, nitrogen, and carbon dioxide for various industrial applications, including petroleum refining and chemical production, is a key factor. The government's infrastructure projects such as NEOM and Vision 2030 also significantly contribute to the market expansion as these initiatives demand high volumes of industrial gases for construction and industrial applications.
• The dominance of cities like Riyadh, Jeddah, and Dammam in the industrial gases market can be attributed to their well-developed industrial base and close proximity to major oil and gas fields. These cities serve as hubs for petrochemical and manufacturing industries, which require a substantial amount of industrial gases for operations. Additionally, these regions are key points of distribution for large industrial projects linked to Vision 2030.
• Saudi Arabia's Vision 2030 aims to transform the Kingdoms economy, with over $1 trillion invested in various infrastructure projects. These initiatives are fueling the demand for industrial gases in sectors like construction, energy, and healthcare. NEOM, a $500 billion smart city, and the Red Sea Project are key drivers of this demand, as they require substantial volumes of gases like oxygen and nitrogen for construction and development activities. These projects are pivotal to the Kingdom's long-term economic diversification strategy.

KSA Industrial Gases Market Segmentation

By Gas Type: The KSA industrial gases market is segmented by gas type into oxygen, nitrogen, hydrogen, carbon dioxide, and argon. Hydrogen is the dominant segment, largely due to its increasing usage in petroleum refining and chemical manufacturing. As hydrogen plays a crucial role in desulfurization and is central to the emerging clean energy initiatives in the country, the demand for this gas has surged.

By Application: The market is segmented by application into healthcare, manufacturing, oil & gas, food & beverage, and electronics. Oil & gas applications dominate the market, primarily due to the continuous demand for industrial gases such as nitrogen for enhanced oil recovery and hydrogen for refinery operations. KSA, being one of the world's largest oil producers, has an extensive network of refineries and petrochemical plants that require a steady supply of industrial gases, making this segment the largest consumer of industrial gases in the country.

KSA Industrial Gases Market Competitive Landscape

The KSA industrial gases market is dominated by several major players who have established strong operational bases in the region. The competitive landscape is shaped by both local companies and global giants in the industrial gases sector. Companies like Air Liquide Saudi Arabia and National Industrial Gases Company (GASCO) have significant market share due to their extensive distribution networks and long-standing relationships with local industries. Foreign companies like Air Products and Linde have gained a foothold through strategic partnerships and by providing cutting-edge technology for gas production.

KSA Industrial Gases Market Analysis

Growth Drivers

• Expanding Petrochemical Industry: The Kingdom of Saudi Arabia (KSA) is one of the world's largest producers of petrochemicals, driven by a robust industrial infrastructure. In 2023, KSAs petrochemical production reached 118 million metric tons, supported by abundant raw material availability such as natural gas. This surge in production has increased the demand for industrial gases like oxygen and nitrogen for various processes, including cracking and polymerization.
• Increasing Demand for Healthcare Applications: In 2023, Saudi Arabia's healthcare sector saw significant growth, with over 520 hospitals across the Kingdom, increasing the demand for medical gases like oxygen, nitrous oxide, and helium. The Saudi government allocated$50.4 billionto healthcare and social development in 2023, constituting about16.96%of its total budget.With the growing population, projected to surpass 35 million in 2024, and increasing incidences of respiratory diseases, the demand for medical gases is on a sharp rise in both public and private hospitals.
• Rising Investments in Industrial Infrastructure: The Saudi government's ambitious NEOM city project and Vision 2030 plan have triggered massive investments in industrial infrastructure. In 2023, the Kingdom allocated over $300 billion to industrial development, which has directly boosted the demand for industrial gases used in construction, welding, and fabrication processes. Projects such as the Red Sea Development and the King Salman Energy Park (SPARK) are expected to significantly enhance the requirement for gases like argon, acetylene, and helium for cutting, welding, and energy production. These investments are a cornerstone in KSAs industrial sector expansion.

Challenges

• Stringent Environmental Regulations: Saudi Arabias commitment to the Paris Agreement has led to more stringent environmental regulations regarding CO2 emissions. In 2023, the Saudi government enforced new limits on industrial carbon emissions, impacting the production of industrial gases like nitrogen and hydrogen, which involve high levels of CO2 generation. Many companies are investing in carbon capture technologies, but the high capital expenditure required remains a significant hurdle.
• Supply Chain Disruptions: Global supply chain disruptions caused by geopolitical tensions and the COVID-19 pandemic have impacted the availability of raw materials required for industrial gas production, including oxygen and nitrogen. In 2022, delays in shipments of critical materials led to production slowdowns in KSAs gas sector, with some suppliers reporting delays of up to 45 days. While the situation improved slightly in 2023, the ongoing instability in international logistics poses a risk to the steady supply of essential inputs, potentially affecting the operational capabilities of local gas manufacturers.

KSA Industrial Gases Market Future Outlook

Over the next five years, the KSA industrial gases market is expected to witness substantial growth. This growth will be driven by continuous investments in large-scale industrial projects under Vision 2030, particularly in hydrogen production and green energy initiatives. The government's focus on sustainable industrial practices and carbon capture technologies is likely to create new opportunities for companies involved in the industrial gases sector. Moreover, the rising demand for medical gases in healthcare and increasing applications in food processing will contribute to market expansion.

Market Opportunities

• Green Hydrogen Initiatives: Saudi Arabia's green hydrogen initiatives are creating significant opportunities in the industrial gases market. The UK government has set an ambitious target to achieve up to 10 GW of low-carbon hydrogen production capacity by 2030, with at least half of this capacity expected to come from green hydrogen. These initiatives are focused on establishing a hydrogen economy in KSA, with the NEOM project playing a central role in hydrogen production.
• Expansion in Untapped Industrial Sectors: Saudi Arabia's industrial gases market is set to expand into new sectors, including chemical manufacturing and oil & gas processing. These sectors require large volumes of gases like nitrogen for blanketing and oxygen for chemical oxidation. The expansion of these industries presents significant growth opportunities for gas suppliers, who are increasingly focusing on tailored solutions for these high-demand sectors.