Middle East looks overseas for growth

By Malini Hariharan

The US shale gas buzz is now drawing Middle East companies with Sabic’s CEO revealing yesterday that the company is considering investing in a US cracker.

Sabic would pursue the US cracker on its own or with a partner, reports ICIS news.

A shortage of ethane in Saudi Arabia means Sabic has no choice but to pursue opportunities overseas. So far this has resulted in a joint venture with Sinopec at Tianjin, China. But the US ethane bonanza arising from increased shale gas production is obviously too hard to ignore.

“We are in the business of petrochemicals,” said Mohammed Al-Mady, adding that SABIC would pursue opportunities in any market where feedstock availability is feasible.

And it is the US that is now offering ample feedstock. The country will generate some 6m tonnes/year of new shale-based natural gas liquids (NGL) feedstock supply over the next eight years, predicted CRA International vice president Neil Checker.

He said that volume would be enough for an additional 5m tonnes/year of olefins and 4.5m tonnes/year of polyolefins in the coming years.

Other Middle East companies are also looking overseas for growth.

Kuwait’s EQUATE is scouting for M&A opportunities outside of the Middle East because of gas feedstock shortage in the country, CEO Hamad Al-Terkait said in an interview ICIS news.

“The reason we want to grow outside of Kuwait is the limitation of feedstock. Now is a good time for merger and acquisition. The [price of] assets is getting really reasonable,” he said.

“This is the future of EQUATE, and the timeline is open,” he added.

Saudi International Petrochemical Company’s (Sipchem) CEO said the company is looking to acquire assets or services in Europe and Asia to extend its marketing and manufacturing capability, or embark on greenfield operations.

Sipchem recently acquired Swiss petrochemical trading and marketing firm Aectra through its affiliate firm, Sipchem Marketing & Services Company (SMSC).

“Acquisitions are a good way to gain quick access to local marketing expertise, but we are also open to setting up our own greenfield projects close to our key markets in Europe and Asia if the economics are right,” he said.

Meanwhile, Saudi Aramco is likely to emerge as a key player in aromatics as opportunities for expansion in this business are being pursued. The company is evaluating the option of producing aromatics at a new refinery under construction in Yanbu.

An aromatics complex will be built downstream of a new refinery at Jazan that is due to be completed in December 2016. This project will have a combined capacity to produce more than 1m tonnes/year of PX and benzene.

And Satorp, the Aramco Total refinery joint-venture, is due to start producing 700,000 tonnes/year of PX and 140,000 tonnes/year of benzene in the second half of 2013.

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