Tuesday, Jul 26, 2011
Gulf News
Abu Dhabi The boards of US-based Dow Chemical Company and state-owned Saudi Arabian Oil Company (Saudi Aramco) have agreed to form a joint venture to build a gigantic $20 billion (Dh73.4 billion) chemical complex in Saudi Arabia’s Jubail industrial city, capable of producing over three million metric tonnes a year of high value-added chemical products and plastics.
In a joint statement yesterday, the two companies said the authorisation for the new joint venture, named Sadara Chemical Company, comes after an extensive project feasibility study and front-end engineering and design effort which began in 2007.
Sadara will become an equal joint venture between Saudi Aramco and Dow after an initial public offering. In addition to equity from the partners, export credit agencies and financial institutions will provide project financing to Sadara.
“Construction will begin immediately and the first production units will come on line in the second half of 2015, with all units expected to be up and running in 2016,” said the statement.
It added: “Once operational, Sadara is expected to deliver annual revenues of approximately $10 billion within a few years and generate thousands of direct and indirect employment opportunities through the complex and related investments in downstream value parks.”
Commenting on the development, an energy expert said while the competition in the global petrochemicals market is set to rise, the market, for now, appears to be large enough to absorb the entry of a new player. “Dow Chemicals and Saudi Aramaco are both giants in their respective fields and if they see a justification for an investment of this magnitude, one can assume at this point that the market is large enough to absorb additional supply,” Kate Dourian, Middle East editor for Platts, a global energy information provider, told Gulf News.
“Saudi Arabia is expanding its downstream industry and Aramco is expanding its presence in the petrochemicals market,” Dourian added.
Comprising 26 manufacturing units, the chemical complex will produce a wide range of products such as polyurethanes, propylene oxide, propylene glycol, elastomers, linear low density polyethylene, low density polyethylene, glycol ethers and amines.
A spokesperson for Abu Dhabi-based petrochemicals company Borouge, which will be producing 4.5 million tonnes of polyolefins a year by mid-2014, told Gulf News the line-up of Sadara’s products has a number of items that Borouge doesn’t produce.
By Himendra Mohan Kumar ?Staff Reporter
Gulf News 2011. All rights reserved.
