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SABIC And ExxonMobil Give Green Light To $3.4Bn Kemya Petchem Project

SABIC And ExxonMobil Give Green Light To $3.4Bn Kemya Petchem Project

Saudi Basic Industries Corporation ( SABIC ) and ExxonMobil are to proceed with a specialty elastomers (synthetic rubber) project at their existing Kemya site in Jubail, they announced on 25 July. The $3.4bn project will be financed by the two shareholders and through third party debt. HSBC is their financial adviser, MEES understands. The project is scheduled for completion in 2015 with a total annual capacity of 400,000 tons/year of halobutyl rubber, styrene butadiene, polybutadiene, ethylene propylene diene monomer (EPDM), thermoplastic specialty polymers and carbon black to serve local markets in the Middle East and Asia. Expansion of transport infrastructure in the Middle East and Asia-Pacific region has created strong demand for rubber products.

The sponsors have awarded the engineering, procurement and construction (EPC) contracts to South Korea�s Daelim, France�s Technip and Spain�s Tecnicas Reunidas. The latter commented that elastomers and related products are needed to support an automobile industry project being undertaken in Jubail. SABIC�s Vice-Chairman and CEO Muhammad al-Mady said that the Kemya project demonstrates a �commitment to build and champion a first-rate rubber industry in Saudi Arabia that supports job creation, develops downstream industries and helps diversify the national economy.�

Kemya � the full name is Al-Jubail Petrochemical Company � is a 50:50 joint venture between SABIC and ExxonMobil. They have collaborated closely since it was established in 1980, producing polyethylene, ethylene and propylene. The new project represents a significant broadening of its product portfolio. In conjunction with the new Kemya facility other entities are being established which include a High Institute for Elastomer Industries (HIEI), which is a vocational training center in Yanbu', a product application center in Riyadh, and thermoplastic polyolefin (TPO) compounding and inventory management facilities in Jubail. These are aligned with the kingdom�s National Industrial Clusters Development Program, which is a strategy designed to expand and diversify Saudi Arabia�s manufacturing sector.

The Kemya deal comes at a watershed in Saudi petchems development. The kingdom wants to expand downstream to industrialize and create jobs, but is running up against a lack of ethane availability. Several new projects are under consideration, including, MEES understands, a potential petrochemical expansion to the 400,000 b/d Total/Aramco Satorp joint venture refinery will, if approved, mainly use refinery product feedstock. �They are looking at refined naphtha for new crackers, but the economics are just not as compelling as for ethane crackers like the majority of Saudi projects,� one source tells MEES . �Ethane crackers really are a no-brainer as far as profitability is concerned,� he adds.

© Copyright MEES 2012.

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