Saudi Arabia’s SABIC, to start work on $9bn US plant

A man walks past the headquarters of Saudi Basic Industries Corp. (SABIC) in Riyadh, Saudi Arabia. (Reuters)
Updated 14 June 2019

Saudi Arabia’s SABIC, to start work on $9bn US plant

  • The 50/50 joint venture with Exxon Mobil, called Gulf Coast Growth Ventures, will have the ability to produce 1.8 million metric tons a year
  • Oil producers and refiners see petrochemicals as a growing market for their crude as demand for motor fuels is expected to plateau

BENGALURU, India: Exxon Mobil Corp. and Saudi Basic Industries Corp. (SABIC) said on Thursday they would start construction of a $9 billion petrochemical plant in the US in the third quarter that would have the world’s largest ethane processing capacity.
The 50/50 joint venture, called Gulf Coast Growth Ventures, will have the ability to produce 1.8 million metric tons a year, and will house a monoethylene glycol unit and two polyethylene units, the companies said.
The project, located north of Corpus Christi in Texas, is expected to be operational by 2022.
Building the world’s largest steam cracker on the doorstep of rapidly growing Permian production gives this project significant scale and feedstock advantages, Exxon Mobil Chief Executive Officer Darren Woods said.
Oil producers and refiners see petrochemicals as a growing market for their crude as demand for motor fuels is expected to plateau with the advent of electric cars and more efficient homes and offices.
The project is expected to create more than 600 permanent jobs, the companies said, adding that the facility will produce materials used in the manufacturing of various consumer products such as automotive coolants, packaging and construction materials.


ADNOC wants its flagship crude as global benchmark

Updated 41 min 47 sec ago

ADNOC wants its flagship crude as global benchmark

  • Abu Dhabi oil giant’s ambitious call comes amid falling Brent volumes and new UAE exchange plan

ABU DHABI: Abu Dhabi National Oil Co. (ADNOC) is aiming to have its Murban futures contract eventually replace North Sea benchmark Brent whose volumes are declining, an ADNOC executive said on Tuesday.

Intercontinental Exchange Inc. plans to launch a new exchange in the UAE, ICE Futures Abu Dhabi (IFAD), in the first half of 2020 to host ADNOC’s flagship Murban crude grade.

“We want to give the industry Murban as a replacement for Brent crude futures,” Philippe Khoury, head of trading at ADNOC group, told an energy conference in the UAE capital Abu Dhabi.

“We still have to demonstrate that over time the community can trust the crude as a benchmark,” he added.

Oil majors BP, Total, Inpex, Vitol , Shell, Petrochina, Korea’s GS Caltex, Japan’s JXTG and Thailand’s PTT have agreed to become partners in the new exchange.

Vitol CEO Russel Hardy said that it will take time to build liquidity on the new exchange, and that Brent, a basket of different crude qualities, and US West Texas Intermediate (WTI) were very established.

“There is a great deal of different constituents playing in those markets. These things will take time to build up on the exchange here,” he said at the same panel discussion.

“It is right to have that level of ambition but it will take some time to build that level of liquidity,” he said of ADNOC’s plans for Murban.

The new contract will create an alternative benchmark to the most commonly used Middle East standard, the Dubai/Oman benchmark operated by the Dubai Mercantile Exchange (DME) and traded on CME’s electronic platform.

Abu Dhabi’s Supreme Petroleum Council last week approved the launch of a new pricing mechanism for Murban crude as part of ADNOC’s broader transformation strategy. It authorized the state energy firm to remove destination restrictions on Murban sales.

ADNOC plans to implement new Murban forward pricing between the second quarter and third quarter of 2020.

UAE Energy Minister Suhail Al-Mazrouei said earlier on Tuesday that he saw no conflict between his country’s compliance with OPEC output cuts and plans to list Murban.

He said the UAE remained committed to cuts agreed by the Organization of the Petroleum Exporting Countries, plus allies led by Russia. These countries have since January implemented a deal to cut output by 1.2 million barrels per day (bpd) which lasts until March 2020, in an attempt to boost prices.

“I don’t think there is a conflict in floating Murban with the fact that UAE is going to comply with whatever we agree to with OPEC. I am not worried about that,” Mazrouei said.

Murban light crude output is around 1.6-1.7 million barrels per day. The UAE has traditionally sold oil directly to end-users, mainly in Asia, based on retroactive pricing rather than forward pricing used by Saudi Arabia, Kuwait and Iraq.

The UAE, the third-largest OPEC producer behind Saudi Arabia and Iraq, pumps around 3 million bpd, produced mostly by ADNOC.