Saudi Basic Industries Corporation (Sabic) could link up with Saudi Aramco on the multi-billion-dollar project to upgrade the refinery at Yanbu on the Red Sea coast and build an adjacent petrochemicals complex.
Sabic is believed to be considering three major project partnerships in Saudi Arabia, as a lack of feedstock limits its opportunities for organic growth in the kingdom. By far the biggest is the potential partnership with Aramco.
Industry sources say a deal with the state company would be a good commercial fit, linking Aramco’s plentiful production of feedstock with Sabic’s market and technological expertise.
The deal is also thought to have the support of the government, which is keen for the kingdom’s two leading companies to join forces to develop a project without an international partner.
The Yanbu venture is the third integrated refinery and petrochemicals plant planned by Aramco, following its Rabigh and Ras Tanura projects, which were implemented jointly with Japan’s Sumitomo Chemical and the US’ Dow Chemical Company.
Although Aramco announced plans for Yanbu as far back as 2005, it has yet to finalise the configuration beyond the upgrade of the 235,000-barrel-a-day refinery and the addition of a steam cracker and aromatics complex.
It will almost certainly produce a different range of products to the Rabigh and Ras Tanura complexes to avoid competing with them. Aramco and Sabic both declined to comment on the prospect of them partnering on Yanbu.
Sabic is also believed to be looking closely at the planned Osos Petrochemicals Company polybutylene terepthalate complex, which is also in Yanbu.
The estimated $500m plant, which will also have butanediol and maleic production units, may be another good fit for the company as it looks to increase its presence in the speciality chemicals market.
There has also been increased speculation in recent months that Sabic could take a stake in the third phase of the Saudi International Petrochemical Company (Sipchem) olefins and derivatives complex in Jubail. The complex has been delayed while Sipchem reaches a final partnership agreement. The technical bid deadline for the main cracker package has again been extended, this time to the end of February.
The Saudi Kayan Petrochemical Company complex, which is a similar size, experienced similar issues until Sabic took a majority stake in the project in 2006.
Sources close to the project indicate that Sipchem will soon sign up with South Korea’s Hanwha Chemical Corporation, rather than Sabic.
The US’ Ineos is also rumoured to be looking at the project after failing to find feedstock for its planned joint venture with the local Delta Oil Company.