JEDDAH, 27 May — Saudi Chevron Petrochemical Company, which holds a 50 percent stake in a $650 million factory being set up in Jubail, has changed its name to ChevronPhillips Saudi Arabia following the merger of petrochemical operations worldwide by international giants Chevron and Phillips.
The Jubail factory, designed to produce 480,000 tons of benzene, 220,000 tons of cyclohexane and 370,000 tons of gasoline, will be now owned equally by ChevronPhilips and Saudi Industrial Venture Capital Group (SIVCG).
SIVCG is a joint stock company formed by a group of 61 leading Saudi businessmen and five holding companies. Well-known business families such as Al-Juffali, Al-Zamil, Al-Jomaih, Al-Rajhi, Al-Suleiman, Al-Quraishi, Kanoo and Zainal have stakes in the company.
The company is now holding talks with international and Gulf banks to reschedule repayment of $275 million toward a $305 million loan it had obtained five years ago.
Saeed Bajouda, vice chairman, affirmed that the company’s financial status was sound and strong. He said the rescheduling move had been taken up due to changes in global economy since 1999. The company has plans to export its products to East Asian, Far East and Northwest European countries.
This joint venture is the largest single private investment in Saudi Arabia’s expanding petrochemical sector. Chevron’s proprietary Aromax Process technology will be used to manufacture benzene from a natural gasoline feedstock supplied by Saudi Aramco. Institut Francais du Petrole has licensed the technology that will be used to manufacture cyclohexane from the benzene.
“This project fits very well with our long-term strategic intent to expand our production of low-cost benzene and other aromatic chemicals through the international deployment of our Aromax Process technology,” says John Peppercorn, a top official of the ChevronPhillips group.
The government of Saudi Arabia considers the petrochemical sector the cornerstone of industrial development and a way for the Kingdom to lessen its dependence on oil revenue. “This is a step in the direction that government policy has been set,” says Anzar Ahmad, vice president of the Riyadh-based Consulting Center for Finance and Investment.
Sheikh Abdul Aziz Al Quraishi, chairman of SIVCG, said his group was happy to participate in the project as it supports the Kingdom’s goals to increase private sector investment in basic industries, create employment opportunities for Saudis, and bring new hydrocarbon processing technology to the Kingdom.
Since the 1980s, foreign investors have had a stake in the Kingdom’s petrochemical business but this has been in partnership with the majority state- controlled conglomerate Saudi Basic Industries Corp. “The deal is proof that the Saudi petrochemical sector is wide open for private investors ... the government policy is clear,” a Riyadh-based economist said.
Chevron and Phillips announced the signing of a letter of intent and exclusivity agreement last year to combine their worldwide chemicals operations into a 50-50 joint venture with more than $6 billion in assets that will be a world-scale competitor in the petrochemicals industry.
The new company, based in Houston, will combine the olefins, polymers and aromatics businesses of Chevron and Phillips. “Our two petrochemicals operations are a great fit,” said Dave O’Reilly, chairman and CEO of Chevron Corp.
