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.


Malaysian court delays Goldman case on 1MDB fund theft

Updated 18 min 49 sec ago
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Malaysian court delays Goldman case on 1MDB fund theft

  • Malaysia filed criminal charges against three units and two ex-employees of the Wall Street titan in December
  • They are accused of misappropriating $2.7 billion and other crimes in relation to bond issues they arranged for 1MDB
KUALA LUMPUR: The Malaysian case against Goldman Sachs on charges the US investment bank stole huge sums from the country’s 1MDB state fund was postponed Monday until September after defense lawyers argued there was a problem with paperwork.
Malaysia filed criminal charges against three units and two ex-employees of the Wall Street titan in December, accusing them of misappropriating $2.7 billion and other crimes in relation to bond issues they arranged for 1MDB.
Allegations that huge sums were looted from the investment vehicle — in a fraud that allegedly involved former Malaysian leader Najib Razak — contributed to the last government’s election defeat last year.
At a procedural hearing in Kuala Lumpur Monday, Goldman lawyer Hisyam Teh Poh Teik said the Hong Kong unit of the bank received its summons just last week, while the summons sent to the Singapore unit only included three out of four charges.
The third Goldman unit in the case is based in London.
He asked for three months to get further instructions from his clients, and the judge set September 30 for another procedural hearing.
Prosecutor Aaron Paul Chelliah told reporters that the prosecution believed all documents had been properly served.
“Their clients have some reservations on whether they were properly served,” he said. “Our position is they have been served.”
Goldman helped arranged bonds totaling $6.5 billion on three occasions for 1MDB, for which they earned fees said to be well above typical rates.
The bank and its former employees are accused of making false and misleading statements to misappropriate huge sums from the 2012 and 2013 bond issuances.
Goldman has vowed to fight the charges, saying the former Malaysian government and 1MDB lied to the bank.
The former bankers accused in the case are Tim Leissner and Ng Chong Hwa, and both have also been charged in the US over the scandal.
Leissner pleaded guilty in America, while Ng was extradited to the US from Malaysia in May and pleaded not guilty.