SABIC Is To Have Petrochemicals Producing Ventures On Both Sides Of Suez.

The Saudi Basic Industries Corp. (SABIC) is on the look-out for good investment opportunities in petrochemicals production and marketing on both sides of Suez. In the process of limited restructuring now to consolidate its operations at home, the company is open to various possibilities.

SABIC is willing to acquire or get equity in existing production ventures, build grass-roots petrochemicals complexes on its own in some key markets, or have new joint ventures with leading players in other markets. It is ready to invest in petrochemicals marketing ventures.

The Saudi company wants to become a global producer and marketer, says SABIC's CEO Mohammed Al Mady. It is also expanding rapidly at home.

SABIC is to invest in overseas petrochemical logistics businesses as well, including storage ventures in key markets on both sides of Suez. Talking on the sidelines of a conference in Jubail on Nov. 14, Mady said his company will be particularly keen on joining existing ventures or establishing overseas projects that will use SABIC-developed technologies.

During the three-day conference - Saudi Arabia: Major Investment Opportunities in the 21st Century, organised by the Royal Commission for Jubail Projects - Industry and Electricity Minister Dr. Hashem Yamani who is also SABIC chairman announced the company's new process technology to produce acetic acid through ethane oxidation. He held a separate press conference at Jubail to explain the key components of the new process.

With Mady present at the press conference, Minister Yamani said it took the company's Research and Technology (R&T) team seven years of work in developing the "SABIC Acetic Acid Technology". It consists of SABIC-developed catalysts, a new oxidation reactor, an integrated process flow and a basic engineering design for a demonstration and commercial plant.

The breakthrough will make SABIC a global producer of acetic acid, which has wide ranging industrial applications including production of vinyl acetate monomer (VAM), acetic anhydride, acetates, and purified terephthalic acid (PTA). The acid is also used in pharmaceutical, detergent and cosmetics industries and agriculture.

Yemani said the new process was significant as it was the first time that a modern grass-roots petrochemical and industrial technology was developed on this scale in the Middle East.

SABIC is to have a semi-commercial plant built adjacent to the Ibn Rushd plant in Yanbu' with a capacity of about 30,000 tons/year of acetic acid. The plant will be on stream by end-2003. Production could be increased in the future to 200,000 t/y.

Mady said the decision to develop the acetic acid technology reflected the fact that existing processes in this field were not freely available. He also said it fitted into SABIC's strategy to develop its acetic acid activities. He added: "Acetic acid will become a strategic business unit for SABIC. It will open a host of new opportunities of us".

Once this process has been commercially proven, SABIC would use it both in Saudi Arabia and overseas. SABIC is yet to decide whether or not the technology will be licenced to other petrochemical companies.

SABIC's R&T Centre, based in Riyadh, is to announce other new technologies in the coming months, Al Mady said, adding: "One of our targets is to make vinyl acetate monomer (VAM). By the time we commission the 30,000 t/y (acetic acid) plant, we should have a VAM technology to supply to downstream industries".

A new, much larger SABIC R&T Centre is to be built in Jubail on a one million square metre "Primary Industrial Park". For this the Royal Commission for Jubail project has recently approved allocation of the land. The centre will cost about SR200m and will supplement the one in Riyadh.

Minister Yamani said with a full-scale development and harnessing of the kingdom's natural gas reserves, Saudi Arabia will have enough ethane feedstock to produce acetic acid. He said Saudi Aramco and the private sector would supply the required ethane feedstocks. (But international petroleum companies which earlier this year offered to build up major integrated gas projects have been deterred by the government's recent cut of power tariffs - see report following).

At the Jubail conference, the Royal Commission announced 59 new industrial projects for that zone. Of these, seven are primary industries, 17 are secondary industries and 35 are support and light manufacturing industries. Over the next 10 years, some 80 new industries are to be built in Jubail and will be mostly petrochemical and downstream manufacturers to rely on abundant feedstocks produced locally.

The Jubail Industrial City now has 17 primary industries owned or shared by SABIC. These are being expanded. The Saudi Petrochemical Co. (Sadaf), a 50-50 JV of SABIC and Shell US, is increasing production of styrene by 500,000 t/y. Al Jubail Petrochemical Co. (Kemya), a 50-50 JV of SABIC and ExxonMobil, is adding a plant to produce 700,000 t/y of ethylene. Eastern Petrochemical Co. (Sharq), a 50-50 JV of SABIC and a Japanese consortium, is raising output of LLDP to 750,000 t/y. SABIC's fully-owned Arabian Petrochemical Co. (Petrokemya) is recommissioning its third ethylene cracker which will have a capacity of 800,000 t/y, will have a new 400,000 t/y polyethylene plant built at its complex, plus a unit to raise its polystyrene production capacity by 100,000 t/y to 260,000 t/y. Saudi European Petrochemical Co. (Ibn Zahr) - owned 70% by SABIC and 10% each by Neste, Ecofuel and Apicorp - is expanding its polypropylene capacity by 320,000 t/y. National Industrial Gases Co. (GAS) is to double oxygen production capacity to 4,400 t/y and nitrogen capacity to 2,200 t/y. Expansion of secondary industries at Jubail includes production of unsaturated polyester resins and gelcoats, epoxy resins, and anti-oxidants. A new steel rolling mill was recently commissioned at Jubail.