Chemical Production Machinery in Saudi Arabia

A Hot Tip about Chemicals in Saudi Arabia

Posted on: 27 May 2010

Overview

A news report in August 2009 noted that Saudi Arabia will invest more than $46 billion to build three world class petrochemical plants. These giant projects include a petrochemical complex at the Ras Tanura Oil Refinery to produce 11 million tons per year of various petrochemical materials, $9 billion to build a huge petrochemical facility in Jubail with a production capacity of 6 million tons per year, and expansion of the Petro-Rabigh operation.

 

Saudi Basic Industries Corp. (SABIC) is a global company. It is a fast growing petrochemical and steel producer. SABIC is hopes to become the preferred world leader in chemicals, creating a corporate environment which inspires innovation and talent. Adopting a new business model, and continued investment commitment in plant and equipment will ensure that SABIC achieves its long term goals.

 

Receptivity to US products and services is very high and the current favorable exchange rate between the US Dollar and Saudi Riyal strengthens the competitiveness of US exports of goods and services. Nevertheless, major competitor engineering companies from Europe, Japan, South Korea, China and Australia appear determined to participate in this lucrative market. SABIC has started looking downstream for the next wave of expansion projects. SABIC’s chief executive officer stated that the company is conducting a study to build new complexes to increase petrochemical production to 130 million metric tons by the year 2020 from a total of 56 million tons in 2008.

 

Best Prospects/Services

There is a huge demand for the products and services of American manufacturers/suppliers of industrial equipment used in the petrochemical industry. U.S. companies are expected to avail themselves of excellent opportunities evolving from new projects undertaken by the joint stock company SABIC and private sector petrochemical companies.

 

Furthermore, American design and engineering companies/licensors have good opportunities to license their processes or provide technical know-how through licensing agreements and through active participation in international tenders to manage, design, procure and build petrochemical complexes.

 

In 2000, Saudi Arabia passed the Foreign Investment Act, which outlines foreign investors’ rights and obligations, provides guidelines for putting the law into practice, and encourages foreign companies to establish directly-owned industrial and non-industrial ventures in Saudi Arabia. It also created the Saudi Arabian General Investment Authority (SAGIA) as a specialized institution in charge of foreign investment. In 2002, the law’s executive rules were amended to further reinforce the basic principles introduced in the original Foreign Investment Act. Foreign investors, interested in setting-up a facility to produce petrochemicals must apply for a license and a commercial registration.

 

Opportunities

Planned projects are:

• Upgrading of the Ras Tanura Petrochemicals Complex & Refinery Upgrade. Saudi Aramco and Dow Chemical Co. Estimated cost is around $27 billion

• Expansion of the ethylene plant at Chevron-Philips facility in Jubail Industrial City. Estimated cost is $109 million.

• Expansion of production capacity of (PET) polyethylene by 420,000 metric tons per year at Ibn Rushd in Yanbu Industrial City on the Red sea.

• In December 2008, SABIC signed agreements with ExxonMobile Chemical (US) for two plants to produce a mix of petrochemical products including polymers. Estimated cost of both plants is $800 million. Al-Jubail Petrochemical Co. (Kemya) will own and operate the first one, while Saudi Yanbu Petrochemical Co. (Yanpet) will own and operate the second one in Yanbu on the Red Sea.

• Building of a 300,000 tpy low-density polyethylene plant in Jubail for Saudi Kayan. Estimated cost is $300 million.

• Raqbigh Refining & Petrochemicals Co. (Petro-Rabigh) is planning a $4 billion expansion of its petrochemical complex in Rabigh on the Red Sea.

• Saudi International Petrochemical Co. (SIPCHEM) signed with Hanwha Chemical Corp. in July 2009, a joint venture agreement to establish a high-tech petrochemical company. The new plant in Jubail will cost around $1.1 billion. Operations will start in 2013.

• Project Management & Development Co. will build a plant in Jubail’s second industrial city to produce 7,500 tons per year of poly-silicon, which is an ingredient of solar cells.

 

 

Read the full market research report

 


Posted: 27 May 2010