Sabic to invest $6.4bn in China joint venture

Saudi Basic Industries Corporation (Sabic), the Middle East’s biggest petrochemicals company, has finalised the investment of 44.8 billion yuan ($6.4 billion) in a joint venture in China.

The investment in the Sabic Fujian petrochemical complex is a significant expansion of Sabic’s core investments in the world’s second-largest economy, the company said in a filing to Saudi Arabia’s Tadawul stock exchange, where its shares are traded.

“This project aims to support Sabic’s aspiration in diversifying the company’s feedstock sources and expanding its manufacturing presence in Asia as a key market for a wide range of products”, it said.

The joint venture, the Sabic Fujian Petrochemical Company, is 51 per cent owned by Sabic’s wholly owned subsidiary Sabic Industrial Investments, while the rest is controlled by Fujian Petrochemical Company.

The complex, which will be established in the Gulei area of Fujian province, is expected to produce 1.8 million tonnes of ethylene annually and will include plants for the manufacturing of ethylene glycol, polythene, polypropylene and polycarbonate.

The construction is expected to begin in the first half of 2024 while the commissioning and start-up will commence in the second half of 2026 and will continue for six months. “The financial results are expected to be reflected after the commercial production and project completion anticipated [in] the first half of 2027,” Sabic said.

Sabic had signed the initial agreement for the petrochemicals complex in September 2018. The investment decision is part of growing trade and investment relations between Saudi Arabia and China.

In December, Saudi Arabia and China signed agreements worth more than $25 billion to deepen their economic ties.

At the China-Saudi Investment Conference in Beijing, which was attended by Saudi Minister of Investment Khalid Al Falih, the kingdom signed more than 60 deals across a variety of sectors, including energy, agriculture, tourism, mining, financial services, logistics, infrastructure, technology and health care.

China is the largest importer of oil from Saudi Arabia, buying about 1.75 million barrels of oil per day in 2022.