The Sadaf plant in Jubail

The Sadaf plant in Jubail

Sabic serious about shale investment

The Saudi producer is looking at new avenues to increase its revenues even as it builds on its existing business lines that have propelled it to distinguished heights

February 2014

Saudi Basic Industries Corporation (Sabic), which reported a 5.7 per cent increase in net profits in Q4, 2013, expects to follow the US and several other states into the shale market this year to firm up its presence in the global hydrocarbon field.

The company also pledged to support Saudi industries with products it manufactures so local industries can benefit from raw material at competitive rates and perform at an advantage in international markets.

The company earned SR6.16 billion ($1.64 billion) in Q4 while for the whole of 2013, net profit climbed 1.8 per cent to SR25.3 billion with sales roughly flat at SR199 billion.  Chief executive Mohamed Al Mady expects the New Year to be better with product prices expected to rise.

The company said a recovery in Europe would help it perform better and that it was interested in investing more in the US and China.

Al Mady revealed Sabic’s shale plans. “We’re currently in talks with a few big names in the US for investment in shale gas. We expect to enter the market sometime this year. This will be great for Sabic and globalise our operations,” he was quoted by Reuters as saying in Davos, Switzerland. Last year Al Mady had said Sabic, a major petrochemical producer, planned to build a new shale gas cracker in the US.

“We hope our profit will increase next year. There won’t be any significant investment in the coming two to three years. Most of the shale investment will come in 2017,” said the official.

Meanwhile, at the Seventh Annual Global Competitiveness Forum in Riyadh, Sabic said it would do its utmost to build the “Made in Saudi Arabia” tag and make the kingdom a prime destination for investors. Mutlaq Al Morished, the company’s executive vice-president, corporate finance, said at the meeting that the initiative to set up new industrial parks to spearhead local production and exports should be taken up seriously. Eight new industrial parks are expected to house 130 specialised factories that will introduce the know-how that local industries need to compete internationally.

Sabic products, made available at prices lower than similar imported items, will support local industries in fields such automotives and paints, Al Morished said. He noted that the tyre and paint industries used raw materials delivered by Sabic, indicating that local tyre and paint industries could gain from having the same raw materials at advantageous prices as they are locally produced at Sabic facilities. Saudi Kayan, a Sabic manufacturing affiliate, has formed a joint venture to build the world’s largest butanol plant in Jubail to supply the kingdom’s paints and coatings industry.



The Kemya plant in Jubail

With regards to Sabic projects anywhere, the company is working on three key ventures expected to be completed in 2015. One is a joint venture with the China Petroleum and Chemical Corporation (Sinopec) for a polycarbonate plant at the Sinopec Sabic Tianjin Petrochemical Company (SSTPC) in Tianjin, China.  The second is a joint venture with ExxonMobil to construct a world-scale speciality elastomers facility at the Al Jubail Petrochemical Company (Kemya).  It will be integrated with the existing Al Jubail complex. The third is the Saudi Kayan butanol venture.

Sabic launched two new manufacturing affiliates in 2012, one of which is the Saudi Organometallic Chemical Company (SOCC), a 50-50 joint venture between Saudi Speciality Chemicals Company (a Sabic affiliate) and Albermarle Netherlands BV. The other affiliate was the Saudi Japanese Acrylonitrile Company (Shrouq), a joint venture between Sabic (50 per cent), Asahi Kasei Chemicals Corporation (30 per cent) and Mitsubishi Corporation (20 per cent).

Sabic and Shell announced in 2012 they would go ahead with plans for expanding various projects at the Saudi Petrochemical Company (Sadaf). The JV partners are also looking to expand their partnership beyond Saudi Arabia.

Both parties are developing a full range of polyols (a polyurethane building block) and styrene monomer propylene oxide (SMPO) units at the existing Sadaf site, which is located in one of the world’s largest and most competitive petrochemical complexes – the Al Jubail industrial zone on Saudi Arabia’s eastern coast. Sabic and Shell are jointly conducting studies to implement the project.

The proposed full range of polyols and SMPO plants will be the first of their kind in the Middle East.

Last year Sabic opened its first engineering thermoplastics facility and a new polypropylene compounding (PPc) plant in Jubail. “These new facilities allow Sabic to further enable its customers’ success by providing them greater access to the diverse portfolio of unique products from Sabic’s Innovative Plastics business, and helping them deliver further differentiated solutions to the market,” said Al Mady.

In the initial phase, the engineering thermoplastics compounding plant will produce Sabic’s Lexan, Cycoloy, Xenoy and Valox resins. These are commonly used engineering thermoplastics spanning multiple industries from consumer electronics to healthcare, from transportation to building and construction.

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