Nuaimi said the government has started a $70bn investment programme to take Saudi Arabia from its current ranking as the world"s tenth largest petrochemical producer.

"What we have achieved so far has been a dream. The petrochemicals industry gives us value added and employment for a large number of the young," Naimi said.

The Saudi economy grew at 4.2 per cent last year, according to Samba bank, but male unemployment remained stuck at an estimated eight per cent. Female unemployment is higher.

Several regional bankers have questioned whether the petrochemical investment would make a profit, saying the money could constitute a huge subsidy, but Nuaimi said it will be profitable in the long term. The minister expected petrochemical output to rise from 60 million tonnes to 100 million by 2015 and the kinds of petrochemicals produced to double.

"The products we"re manufacturing using petrochemical components are highly competitive with anything in the world," said Nuaimi, who delivered the keynote speech at the Arab Economic Forum, a gathering organised by the Al Iktissad Wal Aamal magazine.

Nuaimi said returns from the oil boom were being used to expand Saudi industry and raise the number of Saudis among the workforce, a process known as Saudisation.

Saudi Arabia is the world"s top oil exporter. Naimi said the diversification strategy includes a $13bn investment in a phosphate and fertiliser complex in Ras Al Zor on the Gulf, which is expected to start production by 2010. A 1,400-km railway network will be built to supply raw materials from Saudi Arabia"s north and central regions to the complex.

Nuaimi restricted his comments on the oil market to Saudi"s reserves.

"Our reserves stand at around 264 billion barrels which is a quarter of proven international reserves," he said. "Indications suggest that we could raise this by another 200 billion."

PIN/ REUTERS