SABIC SIGNS AGREEMENT TO DEVELOP METHANOL PLANT IN US
▶ Saudi chemicals company aims to profit from North American shale boom in six-month partnership
Saudi Basic Industries Corporation has signed a preliminary agreement with South Louisiana Methanol to explore the possibility of developing a chemicals plant in the US, as the region’s largest energy operator looks to profit from surging North American shale gas production.
The Louisiana company, which is majority owned by New Zealand’s Todd Corporation, will evaluate the potential for establishing a methanol plant with capacity of more a 1.8 million tonnes annually with Sabic.
The six-month partnership agreement between the two companies has provision for extension. Final investment decision will be taken after obtaining required approvals and licences following the completion of the study, Sabic said in a statement to Saudi Stock Exchange, where its shares are traded.
“The agreement is part of Sabic strategy to focus on geographic diversification of its business to reach new global markets and enable the company to access competitive feedstock,” the company said.
Saudi Aramco, the world’s biggest oil-producing company, is in talks to buy a 70 per cent stake in Sabic, the kingdom’s largest listed company.
The Saudi chemicals company has looked to significantly increase methanol in its portfolio this year.
Sabic increased its stake in Arrazi Methanol Company after purchasing Japan Saudi Arabia Methanol Company’s 50 per cent interest for $150 million in December.
Sabic and JSMC’s holdings in the methanol company, located in the eastern industrial city of Jubail, will now be 75 per cent and 25 per cent, respectively.
Downstream segment investment in the energy value chain has become a priority for Middle East oil producers, as they look to earn revenues from sale of higher-value products.
Aramco announced on Monday it had completed the acquisition of Dutch rubber company Arlanxeo in a transaction valued at €1.5 billion (Dh6.3bn), after purchasing the remaining 50 per cent stake in German specialty company Lanxess.
Surging US shale gas production has also been a big draw for Middle East energy operators, hungry for cheap feedstock and access to market.
In February, Mubadala Investment Company subsidiaries Nova Chemicals and Borealis signed a definitive agreement with France’s Total confirming the development of the companies’ $1.7bn petrochemicals facility in Texas.
The joint venture between Nova, Borealis and Total will include a 1 million tonnes per year ethane steam cracker already under construction in Port Arthur, Texas, together with Total’s existing 400,000 tonnes per year polyethylene facility in Bayport in the oil-rich southern state.
The under-construction cracker facility is adjacent to a Total refinery at Port Arthur, as well as an existing Total steam cracker built as part of a separate joint venture with Germany’s BASF.
Sabic made earlier forays into US chemicals through a joint venture with ExxonMobil in 2017 to build an ethylene plant in Texas. Kuwait’s Equate Petrochemical acquired ethylene glycol-producer MEGlobal in 2015 and is currently building a 750,000-tonne per annum monoethylene glycol facility in Freeport, Texas.
Abu Dhabi’s Mubadala Investment Company’s integrated petroleum and petrochemical unit has also looked to increasingly strengthen its position in North American natural gas and chemicals industry.
In an interview with The National, the platform’s chief executive Musabbeh Al Kaabi said the company was seeking “an almost strategic shift to North America when it comes to the petrochemicals industries”.
The agreement is part of Sabic’s strategy to focus on geographic diversification to reach new global markets SABIC Company statement