Europeans regret missing out on Mideast petchem JVs – Sabic CEO

14 September 2010 18:02  [Source: ICIS news]

TORONTO (ICIS)--Many European chemical firms regret not having invested in petrochemical and chemical joint ventures in Saudi Arabia and elsewhere in the Middle East, Sabic chief executive Mohamed Al-Mady said on Tuesday.

“Many [European] managers admit that they made a strategic mistake,” Al-Mady told German business daily Handelsblatt in an interview. The paper provided a transcript.

The Europeans may not have been interested in sharing their technologies with others, or they may not have trusted that Middle Eastern countries could build up necessary infrastructure and provide the personnel to run such plants - quite unlike US and Japanese firms who went ahead with many joint ventures in the region - he said.

But Al-Mady said he sensed a change in attitude among European chemical firms.

Going forward, Al-Mady said Sabic would expand its focus on specialty chemicals and plastics, including areas such as polyurethane (PU) and nylon – either through organic growth, partnerships with other firms or outright acquisitions.

Asked if Sabic was interested in acquiring Germany-based Bayer MaterialScience with its strong PU business, Al-Mady said that his company was continuously reviewing options.

However, as far as he knew, Bayer MaterialScience was currently not for sale, he added.

Al-Mady would not rule out further basic petrochemical acquisitions – such as Sabic’s 2002 deal for DSM's petrochemicals business or its 2006 deal for Huntsman's European petrochemicals operations - should the opportunity arise.

However, Sabic was by now a major petrochemicals producer, and further acquisitions could cause concerns among competition regulators, he added.

Al-Mady also warned of increasing protectionist measures by some countries.

“Some are interpreting WTO rules in a way we have never heard of before. If that continues, things could become dangerous,” he said.

Asked about natural gas prices and Sabic's access to low-cost feedstock, Al-Mady said he remained confident that the company would continue to enjoy its feedstock advantage.

Providing low-cost gas to Saudi Arabia’s chemical and other industries – rather than selling it at higher price to energy markets - was key to modernising industry and creating employment, he said.

He was convinced that selling the gas at a higher price on energy markets would not yield even 10% of the advantages of selling it to Saudi Arabia’s chemicals and other industries, he said.

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By: Stefan Baumgarten
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