SABIC eyes expansion in China with proposed new plant

A joint venture project between SABIC and Sinopec in Tianjin, China (Supplied)
Updated 11 September 2018
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SABIC eyes expansion in China with proposed new plant

  • Initial agreement signed with Fujian provincial government
  • Part of wider Asian petrochemicals push

LONDON: Saudi Basic Industries Corporation (SABIC) is considering plans to build a petrochemical complex in the Chinese province of Fujian as part of wider efforts to diversify its business internationally.
The petrochemical producer has signed an initial agreement with the Fujian provincial government which sets out a framework of cooperation for the “world scale” project, according to a statement posted on the Tadawul stock exchange in Saudi Arabia.
SABIC said the MoU was part of a strategy to “diversify its operations, seek new investment opportunities and strengthen its position in the Chinese market.”
"It brings SABIC closer to its Asian customer base and provides direct access to the world’s largest and fastest growing market for petrochemicals." said Tommy Trask, director, corporate & infrastructure ratings, Middle East at ratings agency S&P Global.
The agreement did not contain any ‘definitive’ timeframes for the development, the company said.
“A core strategy underlying SABIC’s expansion plans has been to organically enhance its international footprint, both in terms of its ongoing diversification of its product range, as well as in terms of global customer reach, by strengthening its position in strategic markets,” said Ehsan Khoman, the Dubai-based head of Mena research and strategy at MUFG Bank.
The expansion of the petrochemicals giant in China is also part of efforts to secure future demand for the Kingdom’s crude oil supply, he added.
“SABIC acts as a central conduit of Saudi Arabia’s international diversification efforts in the petrochemicals sector, and by organically expanding into Asian markets – where the bulk of the Kingdom’s crude oil is shipped – the country is increasing its Asian market share, whilst in conjunction locking-in future appetite for its hydrocarbon product offering,” said Khoman.
SABIC has already established a foothold in China through its existing 50:50 joint venture with the Chinese state-owned oil company Sinopec in an ethylene plant in the Tianjin Province.
The Saudi company is far from the only global company eyeing opportunities in Asia, with the US oil and gas firm ExxonMobil also securing a preliminary deal with China this month.
ExxonMobil signed a cooperation framework with the Guangdong provincial government to discuss a possible new chemical complex in the province. The project would include a 1.2 million-tons-per-year ethylene flexible feed steam cracker. If the development goes ahead, operations could begin in 2023.
The US company said in a statement it was considering other potential chemical manufacturing projects in Asia in order to capitalize on the expected rise in demand for chemical products across the region. 

It aims to increase its chemical manufacturing capacity in Asia Pacific and North America by 40 percent, according to the company release.
Earlier this year, Germany’s BASF also announced it was considering building a chemical production facility in Guangdong. The company signed a non-binding MoU with the provincial government in July, with the potential investment in the project estimated to reach up to $10 billion.
The project is anticipated to be completed by 2030 and will include a steam cracker with a capacity of 1 million metric tons of ethylene per year.
The plant would become the company’s third-largest site globally after the Ludwigshafen plant in Germany and the Antwerp site in Belgium. BASF currently has another site in Nanjing in China, which is a joint-venture with Sinopec.


Adnoc signs deal with Eni on Ghasha concession

Updated 13 November 2018
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Adnoc signs deal with Eni on Ghasha concession

  • ADNOC grants Eni 25 percent stake in ultra sour gas project
  • Follows Adnoc award to France's Total

LONDON: The Abu Dhabi National Oil Company (ADNOC) has granted the Italian oil company Eni a 25 percent stake in an off-shore gas mega-project, in a move that will support the emirate’s efforts to become self-sufficient in gas.
The energy company is now in discussions with other potential partners for the remaining 15 percent of the available 40 percent stake in the concession earmarked for foreign companies.
The award covers the Ghasha ultra-sour gas concession just off the coast of the UAE, including the Hail and Dalma and other offshore fields. Eni will contribute 25 percent of the development cost of the project which is likely to cost billions of dollars.
The deal comes just days after ADNOC awarded a 40 percent stake to French oil firm Total on Nov. 11 to explore and develop its Ruwais Diyab unconventional gas concession.
The Ghasha gas fields are estimated to hold trillions of standard cubic feet of recoverable gas, according to a company statement.
Once on stream, the project is expected to produce more than 1.5 billion cubic feet of gas per day. This could provide enough gas to supply electricity to more than 2 million homes, said ADNOC.
The project is set to produce 120,000 barrels of oil and high-value condensate per day once complete, the company said.
“ADNOC is committed to ensuring a stable and economic gas supply to the UAE, which is a core component of our 2030 strategy,” said Sultan Ahmed Al-Jaber, UAE minister of state and ADNOC group CEO.
“Development of our Hail, Ghasha and Dalma ultra-sour gas offshore resources, at commercial rates, will make a significant contribution towards delivering that strategic imperative and bringing forward the day when the UAE will not only be self-sufficient in gas but also transitions to net exporter of gas,” he said.
Eni won its first concession rights in the emirate’s oil and gas sector earlier this year, with Adnoc granting the Italian firm a 10 percent interest in its Umm Shaif and Nasr concession and a 5 percent stake in the Lower Zakum concession in March.
“We are pursuing a strategy of growing in the Middle East and today’s signature is further confirmation of our willingness to root our presence in Abu Dhabi,
following the agreements signed last March, with Adnoc,” said Eni CEO, Claudio Descalzi, in a statement.
ADNOC is exploring opportunities beyond Abu Dhabi, having also signed a framework agreement with the Uzbek energy company, Uzbekneftegaz on Tuesday.
The agreement will see the Gulf company provide advice on Uzbekistan’s upstream and downstream operations.