InterviewSaudi NATPET eyes 1m tonne/year PP capacity by 2015

10 October 2011 04:04  [Source: ICIS news]

By Tahir Ikram

NATPET hopes to obtain approval for feedstock propane. (source: NATPET)SINGAPORE (ICIS)--Saudi Arabia’s National Petrochemical Industrial (NATPET) is planning to expand its polypropylene (PP) capacity by 2015, pending the allocation of raw material natural gas by the government, a top executive of the company said over the weekend.

The company operates a 400,000 tonne/year PP facility in Yanbu, which is running at full capacity after a turnaround in the middle of this year, NATPET chief operating officer and president Jamal Malaikah said.

“We have applied to the government for more feedstock,” Malaikah told ICIS. “We are very keen to expand and become a major PP player in the region.”

Work on the expansion, which will “hopefully” see its total capacity nearing 1m tonnes/year, will only start once the Saudi Arabian government approves its application for propane feedstock.

“Such capacity will allow us to compete at tough times like the current one and back in 2008,” he added.

The Saudi government is expected to announce its planned new pricing for various gas feedstock for the Saudi petrochemical industry sometime this year.

“The government has clearly announced that they will re-evaluate the pricing mechanism [of gas] for the petrochemical industry. We should know soon,” Malaikah said.

He added that he hoped the government decision will prove to be beneficial to the industry and reflect the real and actual cost of gas production to preserve the Saudi competitive advantage.

NATPET has started work on a 50:50 joint venture with British company Low & Bonar to produce geotextiles, a speciality product used as a liner in the construction industry. Geotextile liners are laid beneath the surface of roads, Malaikah said, as an example of the product’s application.

The 18,000 tonne/year geotextile unit is expected to come on stream by the last quarter of 2012, he added.

With regard to the antidumping duty (ADD) imposed by India on PP imports from Saudi Arabia, Malaikah said he hoped that New Delhi will revise its decision.

“It is really very disturbing… so far we have not seen any positive sign but we hope that the Indian government will change its position, because it will also benefit its consumers,” Malaikah said.

Saudi Arabia and Oman, along with Singapore, were slapped with tariffs on PP shipments to India for a period of five years from 2009.

“We have… neither [been selling] below the cost of the production nor at lower prices in our own Saudi market, so the ADD is wrong,” he said.

“If their position is based on the cost of raw material, then this, too, is against the WTO [World Trade Organisation] agreement concerning Saudi Arabia,” Malaikah added.

India’s action was the first time that the Saudi price formula for propane and butane, which is linked to the naphtha price, has been termed as unfair by another country.

Saudi exporters had defended their case on the grounds that the mechanism for propane and butane pricing was allowed as part of the country’s accession agreement to the WTO.

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By: Tahir Ikram
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