InterviewPetro Rabigh aims to build on last year's results in 2011

05 April 2011 18:27  [Source: ICIS news]

DUBAI (ICIS)--Saudi Arabia’s Rabigh Refining and Petrochemical (Petro Rabigh) produced good results in 2010, despite operational problems, and it expects its results in 2011 to be stronger, the company’s CEO and president said on Tuesday.

“By the end of last year, our net profit was quite impressive [for] the first year of operation,” said Ziad al-Labban during the Gulf Petrochemicals and Chemicals Association (GPCA) plastics summit in Dubai, United Arab Emirates.

Petro Rabigh is a joint venture between Saudi state-owned Saudi Aramco and Japan’s Sumitomo Chemical. Its complex in Rabigh, Saudi Arabia, includes a 1.3m tonne/year ethane cracker and a 700,000 tonne/year monoethylene glycol (MEG) plant.

The facility also includes a 600,000 tonne/year linear low density polyethylene (LLDPE) plant, a 300,000 tonne/year high density polyethylene (HDPE) unit and a 700,000 tonne/year polypropylene (PP) plant.

Al-Labban said there were “some operational upsets” in 2010 but added that was normal for any petrochemical plant in the first year of operation, given the large scale of the site and it being heavily integrated.

The site includes a high-olefin fluid catalytic cracking (FCC) unit and polyethylene (PE) and PP plants, which are licensed by Sumitomo Chemical.

Al-Labban said operations have been good for the first quarter of 2011 and are looking better.

“We have an internal target that is to exceed last year’s [profit] and I’m more than confident that we are able to do that,” he said, adding that the key reason for Petro Rabigh’s success is the company’s flexibility.

“Being integrated, raw material cost-competitive and geographically advantageous, we can tweak the various production outputs depending on the margins and allocate the products accordingly,” he said.

Al-Labban drew attention to one instance – favouring the cracking of middle distillate, which almost doubles the normal diesel crack. However, he reiterated the importance of developing a long-term customer base by maintaining minimum quantities and, therefore, reliability with its customers.

Unlike many producers in the Middle East, which are naphtha-dominated, Petro Rabigh has ethane as its feedstock, which is priced at 0.75 cents/MMBtu in Saudi Arabia, based on a long-term contract, Al-Labban said.

“[With a] crisis like Japan’s natural disaster and the political unrest in northern Africa and the Middle East, crude oil and naphtha prices are driven to really high levels. But we are unaffected and this is the opportunity to earn these lucrative margins,” he said.

For example, he added, the MEG crack spread in the first quarter of 2011 was half that of last year, which was difficult for naphtha-based producers.

In the past quarter, performance in polyolefins was good, Al-Labban said, adding that PP and low density polyethylene (LDPE) were strong, although he hoped for better pricing in HDPE.

Situated on the west coast of Saudi Arabia, Al-Labban said that Petro Rabigh is not far from Europe and it is just a short distance by sea to Africa, which is a potential emerging market. It is also accessible to a large consumer – China.

Petro Rabigh has a captive market in Saudi Arabia, at the Rabigh PlusTech industrial park, and it is planning for a second such park in line with its Phase II expansion.

“In the world we are living today, there are a lot of changes taking place. It is very difficult to forecast the future. As a result, we have to be flexible and change with the market needs,” said Al-Labban.

For more on the chemicals mentioned in this story, ICIS chemical intelligence

By: Ong Sheau Ling
+65 6780 4359

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