SABIC hankers for biz opportunities
By Jiang Yan (China Business Weekly)
Updated: 2004-07-14 15:00

Saudi Basic Industries Corp (SABIC) is planning to team up with its Chinese counterparts to launch several big projects in a move to further increase its presence in China.

It is in talks with Sinopec Corp on taking a stake in a major ethylene project in Tianjin, according to a Sinopec official.

Earlier media reports said that in April SABIC's vice-president for petrochemicals, Abudullah Nojaidi, met Sinopec's Vice-Chairman and President, Wang Jiming,to discuss the world's 11th-largest petrochemical company's plan to develop a production base in China.

The production capacity of the ethylene cracker will be up to 1 million metric tons per year (mtpy), according to the official.

The report said SABIC has also formed a partnership with Chinese private firm Dalian Shide Group to build a US$5-billion petrochemical complex which will house the world's largest ethylene plant by 2010.

The proposed 50-50 joint venture in Dalian, Northeast China's Liaoning Province, will include a 1.3 million mtpy ethylene plant and a 10 million mtpy oil refinery.

The plan is currently under the final review of the National Development and Reform Commission.

If approved, construction will begin next year and finish in 2010.

Besides, SABIC is also in talks with PetroChina to build an up to 450,000 mtpy ethylene plant and 400,000 mtpy polyvinyl chloride (PVC) facility.

However, Abdulrahman Al-Ubaid, SABIC's vice-president for polyolefin would neither deny nor confirm the three projects.

"We will announce our final statement at the right time," he said.

"China is a major part of our global strategy. We are now looking at several opportunities in the country."

He said acquisition was part of the company's strategy worldwide, including China. Last year, the company acquired DSM's petrochemical business in Europe -- the first in its global expansion.

The company is now the world's third-largest polyethylene (PE) producer and sixth-largest polypropylene (PP) producer. Overall, it is the world's fourth-largest polyolefin producer.

Al-Ubaid was in Shanghai for the company's participation in the Chinaplas 2004, which saw SABIC sign contracts with Chinese customers of more than 200,000 metric tons of polyolefin.

"Chinaplas is of particular significance, because China represents one of the largest and fastest growing segments of the world's economy. It is a major market for SABIC," he said.

China is the world's largest producer of plastics conversion machinery and the second-largest plastics producer.

It consumes over 8 million mtpy PE, exceeding half of the Asia-Pacific's total.

The country's PP consumption is also expected to grow almost 50 per cent year-on-year during 2005 and 2010, which means it has to import 8 million mtpy.

Al-Ubaid anticipated that China will import about 4.5 million metric tons of PE next year to fulfill the local demand due to its strong and rapid industrial development.

"SABIC's strategic goal is to be in strong supply partnerships with our customers in China to help meet that demand as effectively as possible," Al-Ubaid said.

"Nearly half of our total global production is dedicated to meeting demand from the Asian region. China is a key part," said Yousef Al-Benyan, general manager of SABIC Asia-Pacific Pte Ltd.

Last year, sales in China accounted for 40-45 per cent of the total in the Asia-Pacific region. Global sales for the year were US$12.6 billion, increasing 39 per cent over the previous year. Its profits reached US$1.8 billion in 2003, a year-on-year growth of 136 per cent.

SABIC has embarked on major global growth strategy to boost its production capacity. It will invest over US$6.4 billion in the next few years with plans to raise production targets to 60 million mtpy by 2008.

The company also plans to invest as much as US$20 billion in expansions and facilities worldwide during the next 10 years.

Alongside production and supply, SABIC will also invest in research and development in China.

The company is mulling a China technical support centre, possibly in Hong Kong, to overlook after-sales services in the county.

Currently, the technical support for Hong Kong and the mainland is from Singapore. Last year, SABIC established a technical service department in Singapore to provide technical support to customers in the Asia-Pacific.

SABIC has research and development facilities in Riyadh and Al-Jubail in Saudi Arabia, Houston in the United States, Geleen in the Netherlands and Borada in India.

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