Dow Chemical, Saudi Aramco $20bn joint venture given board approval

25 July 2011 12:47  [Source: ICIS news]

Khalid Al-Falih, president and CEO of Saudi AramcoLONDON (ICIS)--US-based Dow Chemical and state oil firm Saudi Aramco have given the final approval to their proposed joint venture project to build and operate a chemicals complex in Jubail Industrial City, Saudi Arabia, valued at $20bn (€14bn), they said on Monday.

The companies' boards of directors have given authorisation for the joint venture, named Sadara Chemical Company, following an extensive project feasibility study and front-end engineering and design (FEED) effort, which began in 2007.

“This project represents a key milestone in Saudi Aramco’s ambitious downstream growth strategy,” said Khalid Al-Falih, president and CEO of Saudi Aramco.

Construction of the facility will begin immediately and the first production units will come on line in the second half of 2015, with all units expected to be up and running in 2016.

The complex will comprise 26 manufacturing units and include a world-scale cracker and production units for polyurethanes (isocyanates, polyether polyols), propylene oxide (PO), propylene glycol, elastomers, linear low density polyethylene (LLDPE), low density polyethylene (LDPE), glycol ethers and amines. It will produce over 3m tonnes/year of high value-added chemical products and performance plastics, Dow Chemical and Saudi Aramco said.

The companies added that once it is operational, Sadara, which will become an equal joint venture between Saudi Aramco and Dow after an initial public offering, is expected to deliver annual revenues of approximately $10bn within a few years.

“Many of Sadara’s products will be produced for the very first time in Saudi Arabia,” Al-Falih added. "This enterprise will play a key role in the Kingdom’s industrial and economic diversification while contributing to the creation of thousands of high-quality jobs.

“It will enable significant development in the country’s conversion industry, thereby supporting Saudi Arabia’s ambition to be a magnet for downstream manufacturing investments that add significant value to the Kingdom’s hydrocarbon resources,” he said.

“[The joint venture] is designed to capture growth in the rapidly growing sectors of energy, transportation and infrastructure, and consumer products by creating a manufacturing hub that will provide a differentiated product slate and an advantaged cost position,” said Andrew Liveris, Dow’s chairman and CEO.

The complex will be the largest ever built in one single phase, the companies added.

($1 = €0.70)

By: Franco Capaldo
+44 (0)20 8652 3214

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