Oct 08 2011 |
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UPDATE: Aramco CEO: Sadara Proj To Cost $20B, Will Require Lot Of Debt
Saturday, Oct 08, 2011
--Aramco CEO says $20 billion Sadara project to require lot of debt
--Aramco to look at using all source available to meet debt needs
--Project's final cost may be lower than $20 billion price tag
DHAHRAN, Saudi Arabia (Zawya Dow Jones)-- Saudi Arabian Oil Co.'s top executive said Saturday the company's $20 billion petrochemical joint venture with Dow Chemical Co. (DOW) would require large amounts of debt financing, with various options being looked into.
Saudi Arabian Oil , the world's biggest oil company better known as Aramco, and Dow Chemical signed a joint venture shareholders' agreement earlier Saturday to build one of the world's largest chemicals plants in the oil-rich kingdom's Eastern Province on the Persian Gulf coast.
The project "will have a typical gearing of projects in the petrochemical industry," Al Falih said. "It is going to require a lot of debt to support the substantial equity that the two partners will be putting in and we will use all sources available."
This would include accessing export credit agencies, the kingdom's Public Investment Fund, which is part of the finance ministry, as well as the commercial market, and bond and sukuk, or Islamic bond issues, he added.
Al Falih said the project's $20 billion price tag was the ceiling and the final cost could be lower.
Construction of the 26 plants that will make up the chemical complex--known as Sadara Chemical Co .--is scheduled to begin immediately, with first output due to come on line in the second half of 2015 and full operation scheduled for the following year.
Sadara will produce polyeurethanes, propylene oxide, propylene glycol, elastomers, linear low-density polyethylene, low density polyethylene, glycol ethers and amines.
Saudi Arabia is ploughing billions of dollars into developing its petrochemical industry in a bid to add value to its vast hydrocarbon resources and to create jobs for its young and growing population. The Sadara project represents Aramco's second major investment in a large-scale petrochemical complex in the kingdom, where it is already involved in a joint venture with Sumitomo Chemical Co. (4005.TO) at Rabigh on the Red Sea.
Al Falih said the Sadara project would use a range of feedstocks, not only ethane--a natural gas derivative commonly used in petrochemical production in Saudi Arabia because of its low price and traditionally wide availability. Sadara is due to be listed on the Saudi bourse at the end of 2013, he added.
He said Aramco had no intention to copy Saudi Basic Industries Corp., or Sabic, the country's petrochemical giant with which it had been in talks at one point over striking a strategic partnership.
"The talks did not lead to anything...Aramco does not want to copy Sabic," Al Falih said. "Sabic still has a relatively small share in the petrochemical products market," he said, adding that it would be better for the kingdom to have Sabic and Aramco as separate players.
Dow Chemical chairman and CEO Andrew Liveris said Sadara will employ some 14,000 people to implement the project.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
08-10-11 1229GMT
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