SABIC CEO: Drop in crude price is of no consequence

SABIC CEO: Drop in crude price is of no consequence
Updated 26 October 2014

SABIC CEO: Drop in crude price is of no consequence

SABIC CEO: Drop in crude price is of no consequence

Muhammed Al-Mady, CEO and vice chairman of Saudi Basic Industries Corporation (SABIC) said the recent drop in the global oil prices would pick up soon and the increasing global population would increase the demand for oil.
Al-Mady stated this while announcing the third quarter report of the company at a media conference at its headquarters.
He said that SABIC’s investments were not affected by the decline in oil prices since they have been planned for a set period of 20 years. “We always do a feasibility study before embarking on major investment projects,” he said, adding that its investments in China will bring the company good returns.
“We are currently looking for more investment opportunities in Chinese companies,” he noted and added that it is also looking for opportunities in North America, Africa and China.
Speaking to Arab News, he said: “The impact of the declining oil prices on the petrochemical industry is not quite clear. In general it will reduce the prices of the naphta and LPG, which are used as raw materials for the petrochemical industry.
“It will have a beneficial effect on the competition among users of naptha and propane gas,” he said, pointing out that it will not have beneficial effect on countries and companies that use fixed gas prices.
Regarding the world’s first oil-to-chemicals (OTC) complex in Saudi Arabia, he said it is progressing well but it will take some more time since there is a lot of research in it. “It will take some time for its completion,” he said, pointing out that SABIC will announce the commencement of the project as soon as the research and innovation work is finalized. “ I am very optimistic about the project, which would have to compete with Sshale gas and coal for chemical projects,” he stressed.
The company reported a net income for the three months ended Sept. 30 of SR6.18 billion, drop from SR6.47 billion in the corresponding quarter last year. The decrease in the net income was attributed to lower quantities sold and other income, despite lower financial charges.
Slow global economic growth was cited as one of the reasons for the drop in profit. Al-Mady said that Europe is still recovering and China's performance is less than the expectations.
He added that SABIC has achieved net profits amounting to SR19.08 billion in nine months of the fiscal year 2014, compared to SR19.07 billion in the same period of last year. Dividends per share within 9 months amounted to SR6.36, he pointed out.
Since SABIC is ranked among the world’s largest petrochemicals manufacturers, SABIC is a public company based in Riyadh. 70 percent of the company’s shares are owned by the Saudi government, with the remaining 30 percent held by private investors in Saudi Arabia and other countries of the Gulf Cooperation Council.
SABIC began its operations in 1976 by a Royal decree and its growth has been nothing short of miraculous. Today, the company has operations in over 40 countries with a global work force of over 40,000 individuals.