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Sabic to boost chemical output 70% by 2025 with new plants

Saudi Basic Industries Corp plans to boost production capacity 70 per cent by 2025 as the Middle East’s dominant chemical maker works with new joint-venture partners and expands its footprint in the heart of the US shale boom.

Increasing chemical production is crucial to Saudi Arabia’s “Vision 2030” blueprint, which envisions creating higher-value products and jobs, Yousef al Benyan, chief executive officer of the company known as Sabic, said in an interview Saturday.

The kingdom has hired longtime Dow Chemical CEO Andrew N. Liveris to act as an adviser after he departs the Dow DuPont Inc. unit on July 1, al Benyan said. Sabic is also proposing to build a Houston headquarters for its Western Hemisphere operations as the company capitalises on the surge in cheap natural gas supplies from North American shale fields.

A final decision on the Houston project will be contingent on receiving local and environmental permits, according to a Sabic statement Saturday. The announcement coincided with the final stop by Saudi Crown Price Mohammed Bin Salman on his three-week US tour.

Sabic “has designated the United States as a focus of its future growth plans, capitalising on the abundance of shale gas,” according to the statement.

At home in Saudi Arabia, a plant being designed with Saudi Aramco would turn crude directly into chemicals, yielding about 9 million metric tons of products a year. The $20 billion (Dh73.4 billion) project would turn 45 per cent of each barrel of oil directly into chemicals, a record-high conversion rate, al Benyan said in the interview outside Houston.

Sabic has formed a joint venture with Exxon Mobil Corp. to build an ethylene plant near Corpus Christi, Texas, with a final investment decision expected this year. The heart of the project features what would be the world’s largest ethane cracker, capable of producing 1.8 million metric tons of ethylene.

Fracking and horizontal drilling in shale formations have unleashed torrents of low-cost US natural gas that made the country among the most profitable places to produce chemicals, beating the Middle East in attracting projects.

The company is also pursuing a project with Shenhua Ningxia Coal Industry Group to convert coal to chemicals in China.

Strategic markets

Acquisitions could supplement the company’s organic growth, al Benyan. Saudi Arabia is increasing chemical production with demand for motor fuels expected to slow amid tightening fuel efficiency standards and the rise of electric vehicles.

In addition, Sabic is considering potential projects in Latin America and Africa, he said. North Africa could develop into a strategic market for the company, al Benyan said.

Sabic in January acquired a 25 per cent stake in Swiss chemical maker Clariant AG for about $2.5 billion, its biggest deal since acquiring General Electric Co’s plastics business for $11.6 billion in 2007. It’s premature to comment on whether Sabic might increase its stake until regulators approve the transaction, likely in the third quarter, al Benyan said.

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Kohan Textile Journal is the leading magazine for the Textile industry, Textile machinery, Synthetic Fibers and Nonwovens in MENA region (the Middle East and North Africa) and is published every two months. It basically emphasizes on textile machinery, textile products, carpet and synthetic fibres distributed among the factories, manufacturers, and traders of floorcovering industries.l

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