Sabic continues to grow at home

16 May 2013

If there was ample feedstock demand in the kingdom, Sabic would be less inclined to look overseas

Saudi Basic Industries Corporation (Sabic) is unusual in that it is regarded as the largest traded company in the Middle East as well as a state-owned company that has a responsibility to its home country.

Sabic has always managed to navigate this fine line well and has grown over the past 37 years to become one of the world’s largest chemicals producers.

Sabic has taken ownership of many of Riyadh’s industrial diversification plans and is promoting the importance of smaller enterprises setting up in Saudi Arabia and taking advantage of good feedstock availability.

Industrial clusters will create jobs and wealth and also provide an outlet for the kingdom’s ever-growing petrochemicals industry. Selling intermediate chemicals to domestic consumers means Sabic does not have to rely on the vagaries of the international market.

However, Sabic is a global company and it is now looking at expanding its operations overseas. Building an ethane cracker in the US is one potential project and taking advantage of low-cost feedstock is something the company has great experience of. 

The global petrochemicals industry is changing and this is being driven by access to gas. Europe is now beginning to scale down its operations, while the US is in the middle of a boom. China is still growing, but a slowdown in the Asian powerhouse, especially in construction, can have a dire effect on demand for products made from petrochemicals.

If the kingdom can sort its feedstock issues and release more gas domestically it will be interesting to see how Sabic reacts. The Middle East and Africa is growing and Sabic will be looking to tap this potentially massive market from its home base.

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