By Malini Hariharan
Nearly two years after SABIC and ExxonMobil signed an agreement for a multi-billion dollar 50:50 joint-venture elastomers complex iin Saudi Arabia, the two majors have yet to take a final decision on the project.
At last year’s GPCA forum in December, Mohamed Al-Mady, SABIC’s CEO, had indicated that the two companies were waiting approval from their respective management boards while work was on with contractors for detailed engineering and cost estimation.
And there has not been much progress since then.
Pic source: www. tv.ae
Talking to reporters on Sunday after announcing the company’s results for the third quarter, Al-Mady confirmed that a final decision has yet to be taken.
“We are moving to the detailed feasibility study … we have not reached final decision … (It is expected) some time early next year,” he said.
The blog has already written about weak economics for derivative projects in the Middle East. Could this be a reason for the hesitation on part of the two majors to quickly implement this project?
Another downstream project being pursued independently by SABIC’s fully owned affiliate Petrokemya is also moving slowly.
Following SABIC’s acquisition of GE Plastics, Petrokemya had revealed in early 2008 plans for the Kingdom’s first acrylonitrile butadiene styrene (ABS) plant with a capacity of 200,000 tonnes/year.
Al-Mady said on Sunday that the project has not been cancelled. But it appears that the capacity of the project is being reviewed.
Meanwhile, Ibn Rushd, another Sabic affiliate, is expected to finalise bids for expansion of capacities for purified terephthalic acid (PTA) and polyethylene terephthalate (PET).
Progress may be slow but with gas in short supply SABIC has no alternative but to persist in its efforts move downstream and this was confirmed by Al-Mady.
“We have to be realistic. The investment cycle takes time to find the gas … SABIC is a global company we cannot wait for the gas to come we have to do business either in downstream, in innovation … until the gas is available.”