RIYADH, 13 January 2008 — Saudi Basic Industries Corp (SABIC) is considering a deal with Saudi Aramco to upgrade a Red Sea Coast refinery and a build a petrochemicals complex there, a magazine reported.
SABIC is also believed to be looking closely at the planned Osos Petrochemicals Company polybutylene terepthalate complex, which is also in Yanbu.
The estimated $500 million plant, which will also have butanediol and maleic production units, may be another good fit for the company as it looks to increase its presence in the speciality chemicals market.
A deal would give SABIC, the world’s largest chemical maker by market value, access to Aramco feedstock and allow the state oil firm to press on with plans to develop its Yanbu project without a foreign partner, the Middle East Economic Digest said.
Any tie-up between the two companies would have the blessing of the Saudi government, the London-based weekly said in its latest edition, citing unnamed industry sources.
The Yanbu venture is one of three refinery and petrochemical plants belonging to Aramco, the world’s largest oil company by production. The other two, Rabigh and Ras Tanura, are joint ventures with Japan’s Sumitomo Chemical Co Ltd and the Dow Chemical Co of the United States.
Aramco announced plans for Yanbu in 2005, including upgrading the 235,000-barrel-a-day refinery and adding a steam cracker and aromatics complex, the magazine said.
“It will almost certainly produce a different range of products to the Rabigh and Ras Tanura complexes to avoid competing with them,” it said.
SABIC, which makes chemicals, fertiliser and steel, in October posted its fifth consecutive record profit in the third quarter on higher prices for its products and more production.
Industry sources say a deal with the state company would be a good commercial fit, linking Aramco’s plentiful production of feedstock with SABIC’s market and technological expertise.
The deal is also thought to have the support of the government, which is keen for the kingdom’s two leading companies to join forces to develop a project without an international partner.
There has been increased speculation in recent months that SABIC could take a stake in the third phase of the Saudi International Petrochemical Company (Sipchem) olefins and derivatives complex in Jubail. The complex has been delayed while Sipchem reaches a final partnership agreement. The technical bid deadline for the main cracker package has again been extended, this time to the end of February.
The Saudi Kayan Petrochemical Company complex, which has similar size, experienced similar issues until SABIC took a majority stake in the project in 2006. Sources close to the project said Sipchem will soon sign up with South Korea’s Hanwha Chemical Corporation.
