NPRA '09: Petchem players in period of evaluation - Al-Mady

30 March 2009 22:06  [Source: ICIS news]

By Nigel Davis

SAN ANTONIO, Texas (ICIS news)--Petrochemical players are currently in a period of evaluation and have yet to reach a point where they can make strategic moves, SABIC vice chairman and CEO Mohamed Al-Mady said on Monday.

So much depended on the banking situation, he said, and when financial institutions found the appetite to resume lending to investors.

The situation was not clear now but was likely to become more so towards 2010, he added at a press conference on the sidelines of the National Petrochemical & Refiners Association's (NPRA's) 34th International Petrochemicals Conference.

Al-Mady had said on Sunday that SABIC wanted to play a major role in restructuring the global petrochemical industry. The SABIC CEO, however, did not reveal much about the company’s global ambitions.

The Saudi Arabia based-petrochemicals major had expanded into Europe with the acquisition of the former DSM petrochemicals business and petrochemicals assets from Huntsman.

Its acquisition of the GE performance materials business had placed it in a strong downstream polymers position in the US.

Investment in new capacities in Saudi Arabia would give the company significantly enhanced production capability.

Al Mady said SABIC’s Yansab (Yanbu National Petrochemical) cracker project would be coming on stream in the middle of this year and the Sharq (Eastern Petrochemical Company) venture at the year end.

The Saudi Kayan project, in which SABIC has a 35% stake, had a scheduled on-stream date of late 2010.

SABIC would be marketing polyolefins from China’s Fujian Refining and Petrochemicals Company in a agreement with Sino Saudi Aramco. It is a partner with Sinopec at the Tianjin Industrial Complex.

SABIC was developing its supply chains to move product from these new facilities and its existing plants. It was also putting in place a global structure which Al Mady expected to be implemented towards the end of the year.

The “One SABIC” model is a matrix system encompassing the strategic business units (SBUs) and regional operations.

“We have a delivery system that can reach global markets effectively,” Al Mady said.

He added, however, that the company was not immune from the impact of supply-side driven overcapacities.

New ethylene chain capacity additions in the Middle East and in Asia were expected to depress the markets for these products for a number of years.

The current financial crisis and global recession had created the most challenging operating environment for chemicals producers in decades.

Market conditions were still very volatile, Al Mady said. “Overall the signs of recovery are weak.” he added.

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By: Nigel Davis
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