For Sipchem, 2009 has been a significant and challenging year so far but one also marked by the vision of a greater role for itself.

The company, Saudi Arabia’s largest private petrochemical operation, advanced towards full operation of its SR7 billion ($1.86 billion) acetyls complex and saw its profits plunge because of the prevailing global economic crisis that curtailed demand. But it also took decisive steps towards achieving its Phase 3 vision by signing a technology agreement with Exxon Mobil Chemical Technology Licencing for its planned ethylene vinyl acetate (EVA) plant.

In another development, the company signed an MoU with Sabic for mutual cooperation.

Along the way, in the second quarter, Sipchem hosted a visit by King Abdallah, indicative of the Saudi government’s deep interest in and appreciation of the company’s industrial activities.

In late August the company announced that its carbon monoxide plant, the largest of its kind in the world, achieved 98.8 per cent purity during the first speculative production. A Sipchem affiliate, International Gases Company, is operating the plant which is pivotal as a feedstock provider for the just completed acetic acid plant and other future plants. The carbon monoxide and acetic acid plants along with a third plant, which will produce vinyl acetate monomer, comprise the Phase 2 acetyls complex which is expected to assume full operations by the end of this year.  The carbon monoxide plant has an annual production capacity of 345,000 tonnes, the acetic acid plant 430,000 tonnes and the vinyl acetate monomer plant 330,000 tonnes.

Sipchem’s Phase 1 comprised the methanol and butanediol plants which have been in operation for some time.

The technology licensing agreement it secured with Exxon Mobil puts the company on the path to producing 200,000 tonnes annually of EVA. The plant will be built at the Sipchem site in Jubail and completion is currently scheduled for the end of 2013. Exxon Mobil will deliver its tubular high-pressure low-density polyethylene process for what is described as a world-scale plant.

Sabic will provide ethylene to the EVA plant and in another example of Sipchem integration, the new plant will utilise vinyl acetate monomer from Sipchem affiliate International Vinyl Acetate Company whose Phase 2 plant will be in full operation later this year.

MoU with Sabic
The understanding behind  the MoU with Sabic is that the two companies will utilise their existing infrastructure and manufacturing capacity to process Saudi Aramco feedstock allocated by the Ministry of Petroleum and Mineral Resources for new projects.

Sabic is constructing seven plants to produce methyl metha acrylate (MMA), poly methyl metha acrylate, acrylonitrile, polyacrylonitrile, polyacetyl resins, carbon fiber and sodium cyanide annually. Sipchem will build two plants for an estimated cost of $810 million for the production of 125,000 tonnes of poly vinyl acetate and 200,000 tonnes of EVA annually. Both plants are expected to go on stream by the end of 2013.

Early co-operation will have Sabic cracking feedstock allocated by the Ministry of Petroleum and Minerals to Sipchem to provide the ethylene vinyl acetate plant with ethylene while Sipchem will provide carbon monoxide to Sabic for the production of MMA.

The Sipchem-Sabic co-operation has great potential for Saudi industry in that both companies will set up R&D facilities to develop product applications which should encourage the downstream sector to set up enterprises in the fields of automotive parts, electrical and electronic appliances, household commodities, computers and health care products.

Meanwhile, the company took a decision to hold maintenance shut downs in the third quarter instead of the fourth quarter while prices were still low. Low product prices have led to a 92.2 per cent reduction in the total profit to SR47.9 million in first-half 2009 compared with the same period in 2008. The company explained that the reduction was due to the international economic crisis that lowered demand and also due to unscheduled maintenance shutdowns in its methanol and butanediol plants.