SABIC to move into specialty chems – report

29 January 2007 05:13  [Source: ICIS news]

SINGAPORE (ICIS news)--Saudi Basic Industries Corp (SABIC) plans to produce specialty chemicals such as polycarbonate (PC) to diversify and compete with European producers, its chief executive officer told the media in Davos, Switzerland, on Saturday.

"We're going into new products, specialty chemicals, and they will become a very major component of our portfolio," Mohammed Al-Mady was quoted as saying in a Bloomberg report.

"The Europeans are developing more sophisticated products, and so are we."

SABIC plans to spend $23bn to increase total production by 49% to 73m tonnes/year by 2009, Al-Mady said. By 2020, specialty chemicals like PC will make up about 25-30% of the company's sales, according to its forecast.

Specialty chemicals "don't necessarily have better margins than our traditional products, but their prices are less affected by cyclicality", Al-Mady said.

The Saudi major will soon complete a study on the feasibility of expanding two plants at Yanbu and Al-Jubail that it owns jointly with ExxonMobil, he added. The project will have ``a huge dollar value,'' he said, declining to elaborate.

SABIC said earlier that the aim of the expansion was to boost production of rubber, thermoplastic polymers and carbon black, used to make tires and inks. If approved, it would begin in 2011.

Al-Mady also said he hopes to learn this year whether international energy companies including Shell have found new reserves of gas in Saudi Arabia that can be used to supplement feedstock supplies from Saudi Aramco.

SABIC will need to raise "below $1bn", in equity and debt this year for a methanol plant in Al-Jubail, he said.

The company was also focusing on the Chinese and Indian markets due to strong demand growth, Al-Mady was quoted as saying in the Arab News.

"In China, petrochemicals consumption has increased by about 12% per year over the past 10 years compared to only 4% for Europe and the US," he said.

By: Florence Tan
+65 6780 4359

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