Sabic prequalifies contractors for headquarters project

16 October 2016

Company plans to build new multibillion-riyal corporate complex in industrial hub of Jubail

Saudi Basic Industries Corporation (Sabic), the Riyadh-listed petrochemicals producer, is prequalifying local and international contractors to build a new multibillion-riyal headquarters building in the kingdom’s eastern province.

The contractors are expecting Sabic to release the list of the prequalified companies by the end of this month for the project, which will be built in the industrial hub of Jubail, sources said, asking not be identified as the information is not public.

The new corporate complex of Sabic has six components, with a total built-up area of 280,000 square metres. The offices for the executives have been divided into two separate facilities, which includes the main 25-storey tower building and a separate office block. There will be two separate podium areas under the tower and an office block housing cafeteria, meeting centres, auditorium, learning and development, and retail facilities.

The project also includes a data centre, a ground plus eight-floor parking structure and a sports centre with swimming pools, squash courts and fitness centres, according to the sources.

Sabic, the global petrochemicals giant, which is at the forefront of the kingdom’s efforts to diversify its economy and cut its dependence on oil revenues to fuel its economy, is currently conducting a joint feasibility with state-controlled Saudi Aramco for an estimated $30bn crude oil-to-chemicals plant in the kingdom.

The firm, which aims to turn its business around amid an extended earnings slump is looking at selling some of its assets and adding new revenues lines through joint ventures and investments abroad.

Sabic, like many other petrochemicals producers in the kingdom, has benefited from subsidised gas feedstock prices, which gave it an edge over competitors from non-energy producing countries. However, the costs are rising for producers in Saudi Arabia as the government adjusts energy and gas subsidies and restructures electricity subsidies as part of the broader economic reforms.

Sabic is also studying the joint development of a petrochemicals complex on the Gulf Coast of the US with an affiliate of the US’ ExxonMobil. The potential complex would also include an ethylene production unit, which will supply ethylene to other units to produce ethylene derivatives, Sabic announced in a separate bourse filing last week. The company has not provided details on when the study will be concluded and the potential investment required to develop the scheme.

In May, the company signed an agreement with China’s Shenhua Ningxia Coal Industry Group, which could lead to a complex being built in China. Sabic’s potential Chinese venture will be a “greenfield petrochemicals complex” located in the Ningxia Hui region of China, and its counterpart for the scheme is a unit of Shenhua Group Corporation.

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