WorldCity, Annual Report: No. 7 Saudi Arabia | Connecting Local Business Leaders To The Global Economy

Annual Report: No. 7 Saudi Arabia

July 6th, 2006

Saudi Arabia is the top Middle Eastern trade partner for Houston, although New Orleans handles more Saudi goods.

Propelled by energy-related cargo, Saudi Arabia was Houston’s top trade partner in the Middle East, accounting for 42 percent of Houston’s maritime trade exchange with the region and most of its Mideast air cargo.

Two-way trade with the Houston-Galveston Customs District reached $5.6 billion, a gain of 7 percent when compared with 2004. But it was a one-sided exchange.

Houston imported $4.5 billion in goods while exporting $1.1 billion, for a $3.4 billion deficit.

Not surprisingly, crude oil was the major import. Saudi crude shipments totaled $3.3 billion in 2005, dipping 10 percent from the $3.7 billion-worth that entered the Houston-Galveston district in 2004. By comparison, the New Orleans district, which includes the Louisiana Offshore Oil Port in nearby Fourchon, Louisiana, had imports valued at $8 billion – an increase of 29 percent over 2004.

Together, Houston and New Orleans handled 46 percent of all U.S. imports of Saudi crude. The OPEC nation boasts the world’s biggest proven oil reserves, nearly 262 billion barrels, and is the third largest crude oil supplier to the U.S. market, trailing only Canada and Mexico. Aramco Services, an affiliate of Saudi Arabian Oil Co., is based in Houston.

Houston also imported $885 million-worth of refined petroleum, a gain of 156 percent when compared with 2004. Other energy imports included nearly $201 million in natural gas, a jump of 96 percent from 2004.

Imports of ether alcohols fell nearly 30 percent to close the year near $16 million. However, imports of acyclic alcohols – butanol and octanol – reached $14.9 million. That’s a jump from the $440,000-worth in 2004.

Butanol has bio-diesel uses. Octanol primarily refers to primary methyl alcohols used to produce synthetic natural gas.

Saudi Arabia wants to lessen its dependency on oil and gas. As a new member of the World Trade Organization, it now has increased access to U.S. and global markets. Its WTO membership has also opened up new opportunities for U.S. exporters, especially in agriculture. Eased tariffs could also boost exports by aircraft manufacturers, chemical companies and information technology companies.

On the export side in 2005, machinery parts for use in Saudi oil fields emerged as the top commodity, jumping more than 74 percent to total $282.5 million. Passenger vehicles were the No. 2 export, rising nearly 14 percent in value to exceed $101 million.

In trade with the United States as a whole, passenger vehicles were the top export commodity. Some $2.1 billion in U.S.-made vehicles went to the Middle Eastern country in 2005, more than double the level in 2004.

Rice was also an important export to Saudi Arabia from the Houston district. Southeast Texas sent $44.3 million worth of rice to the oil-rich nation, a gain of 3.5 percent compared with 2004. Texas is one of the principal rice-producing states, and rice production contributes nearly $1 billion to the state economy annually, according to Texas A & M University.

That said, rice exports for 2006 may be smaller than usual. A U.S. Department of Agriculture report predicted that higher fuel and fertilizer prices, as well as damage from Gulf Coast hurricanes in 2005, would result in a reduced harvest.

Houston also sent Saudi Arabia $39 million in machines and appliances for testing metals, up 14 percent from 2004. Exports of surveying and hydraulic equipment jumped even more, rising to $16.3 million. In 2004, they were $6.3 million.

But exports of aircraft parts plummeted 84 percent to just more than $19 million.

Only the New Orleans Customs District beat Houston when it came to trade with Saudi Arabia last year. New Orleans processed $8.2 billion in cargo coming from or heading to the Middle Eastern nation.