SAUDI ARABIA - The SABIC Perspective.

SABIC is to raise its petrochemicals production capacity from 43m t/y in 2005 to 64m t/y by 2008, through expansion of its current plants and new ventures. SABIC's CEO Muhammad al-Mady is optimistic about the prospects for petrochemicals in the coming years, pointing to a steady rise of the Asian markets, and anticipates good profits from its expansions into Europe and the US. SABIC is the biggest and most profitable public company in the Middle East (see background in down15SaudiPetchmOct10-05)

The core of SABIC's expansion is a big rise in its domestic capacity, including its two mega-projects - the $4.5 bn construction of the Yanbu' National Petrochemicals Co. (YanSab) complex and the $3.5 bn expansion of its Jubail affiliate Eastern Petrochemical Co. (Sharq). SABIC has a $25-30 bn programme, which covers steel, Saudi Arabian Fertiliser Co. (Safco), Europe, the two crackers and JVs in China. But SABIC's share of local petrochemicals output will fall from 95% to 75% by 2010, due to huge private investment in the sector.

Of great worry is the mounting demand for feedstock in the kingdom. But Mady says SABIC investments overseas are not a result of these concerns, adding: "Yes, we are concerned about feedstock. But our global acquisition strategy was started before concerns about feedstock supply. We look at it as a challenge and an opportunity. We can use the position to our advantage through co-operation with new producers. We may participate with these investors in the future".

The rise in the prices of construction materials has hit SABIC. But Mady said: "The impact of rising materials costs is not only on SABIC. The rise in the cost of steel and cement is worldwide. It is therefore a level-playing field for everyone in the industry and does not affect our strategic planning. Of course it increases our costs but we are hopeful we can mitigate against this".

All of SABIC's plants at Jubail and Yanbu' keep raising capacity or are having their output streams diversified. Their plants are mostly JVs between SABIC and foreign firms. SABIC and partners in Jubail and Yanbu' produce more than 45 kinds of petrochemicals and other products.

Saudi Petrochemical Co. (Sadaf), a SABIC-Shell JV in Jubail, is considering relaunching its planned 600,000 t/y styrene plant. The project was postponed in early 2005 because of rising costs. Contractors are being sounded out for bidding for an updated FEED contract and for the EPC elements. The scope of work in other parts of the project will be reduced to keep costs down. In early 2005, CTCI of Taiwan and Daelim Industrial of South Korea made offers in the range of $400-450m for the contract. It was then said the lowest offer, from Daelim, exceeded Sadaf's budget by at least 25% because of increased material costs. ABB Lummus Global had the process package and was to provide its in-house styrene technology for the project. Sadaf already produces more than 1m t/y of styrene. Its products include styrene monomer, ethylene dichloride, caustic soda, ethanol and MTBE.

SABIC and ExxonMobil Chemical are to produce synthetic rubber at their JVs in Jubail and Yanbu'. Proposals have been invited for the various technology packages at the Saudi Yanbu Petrochemical Co. (YanPet) and al-Jubail Petrochemical Co. (Kemya). Awards are expected by end-2008. Once all the technology licences are in place, SABIC and Exxon are to tender the two FEED contracts, one for each complex, in the first quarter of 2008. Tendering for the EPC packages is expected later in 2008.

Exxon and SABIC plan to produce carbon black and rubber and thermoplastic speciality polymers, including ethylene propylene diene monomer, thermoplastic olefin, butyl and synthetic rubber, from YanPet and Kemya.

The technology licences cover a range of processes, including butadiene extraction, MTBE backcracking and styrene-butadiene rubber/polybutadiene rubber.

ABB Lummus has recently got a $40m EPC contract to reduce the environmental impact of benzene at the Kemya complex.

Arabian Petrochemical Co. (Petrokemya), fully owned by SABIC, went on stream in Jubail in 1985. Its product range and capacities have been expanded since then to include: 1.95m t/y of ethylene; 100,000 t/y of polystyrene; 70,000 t/y of benzene; 70,000 t/y of butadiene; 100,000 t/y of butene-1; and varying quantities of vinyl chloride monomer (VCM) and styrene (see its profile in down15SaudiPetchmOct10-05).

Petrokemya in mid-2007 put plans to expand its cracker capacity on hold while it was to evaluate its feedstock options. The decision came less than three months after Stone & Webster, part of the US' Shaw Group, received a letter of intent to debottleneck and expand cracker-1 to take it to close to 1m t/y. The firm's original plan was to also increase the capacity at cracker-3. But it was unable to secure enough gas feedstock to allow it to debottleneck both. It is unclear what impact the delay will have on Petrokemya's project to expand its vinyls capacity. Oslo-based Aker Kvaerner is carrying out basic engineering on the vinyl chloride monomer unit. Later this year, an EPC tender is to be issued. FEED on other elements of the expansion is being done by Technip.

SABIC-Ma'aden JV: Saudi Arabian Mining Co. (Ma'aden) and SABIC on Sept. 15 signed a JV agreement covering their Ras al-Zour phosphate project. SABIC will have 30%, with Ma'aden holding 70%. Ma'aden will provide phosphate expertise. SABIC will provide nitrogen fertiliser technology and market the diammonium phosphate end product.

The cost of this project has risen from SR13 bn ($3.466 bn) to about SR21 bn ($5.6 bn).

The complex is to include a 3m t/y diammonia phosphate unit, a 1.4m t/y phosphoric acid unit and a 4.5m t/y sulphuric acid plant (see down15SaudiPetchmOct10-05).