The local Farabi Petrochemicals Company moving ahead with its proposed $1bn-plus facility in Yanbu comes at a time when Saudi Arabias chemicals projects market had ground to a near halt.
Farabi looks set to award Frances Technip the front-end engineering and design (feed) and project management consultancy (PMC) for the scheme, and it is hoped main contract tenders will be issued in early 2016.
The kingdom has been at the forefront of petrochemicals projects spending over the past five years and some of the schemes that are nearing completion are as big as any you will find anywhere in the world.
However, chemicals projects spending is a cyclical business and even if oil prices had not collapsed as much as they have, it is very likely there would still have followed a period of consolidation in Saudi Arabia.
Farabi is a local privately owned company and the new scheme will be a mirror of what they already produce surfactant allied business chemicals from a complex in Jubail. The liquid feedstock will come from local oil refineries.
The fact that Farabi has moved ahead with the project in such uncertain times needs to be applauded and is proof to other businesses in the kingdom of the importance of looking at long-term benefits rather than short-term risks.
It is exactly these types of business that Riyadh is hoping will help major players such as Saudi Basic Industries Corporation (Sabic) and Saudi Aramco in diversifying the kingdoms economy and driving conversion industries. Small manufacturers can utilise almost the entire offtake of Farabi and this is a vital selling point of the scheme.
It is also encouraging to see private local companies investing in the kingdom at time when oil prices are in the doldrums. Riyadh will surely be hoping that Farabi taking the initiative will inspire other businesses to initiate similar projects.