Less than three months since Saudi Basic Industries Corporation (known as SABIC) signed its first deal to purchase U.S. shale gas for use at its Teesside petrochemical plant in Britain, the company announced that it’s considering a jointly-owned, US-based petrochemicals complex with an unnamed affiliate of Exxon Mobil.
SABIC, the world’s second largest chemical company, said in a statement that the project, which would produce ethylene and ethylene derivatives, would most likely be located on the US Gulf Coast – possibly in Texas or Louisiana.
Saudi Arabia is the worlds biggest oil exporter but that means that most of its gas is earmarked for domestic power generation. This leave petrochemical companies, such as SABIC, looking for outside sources of cheap feedstocks. Inexpensive US shale gas certainly fits the bill.
“We are focused on geographic diversification to supply new markets,” said Yousef Abdullah al-Benyan, SABIC vice chairman and chief executive officer. “The proposed venture would capture competitive feedstock and reinforce SABIC’s strong position in the value chain.”
Exxon and SABIC have a long history of cooperation, having worked together for 35 years in other chemical joint ventures in the Middle East.
Commenting on the latest joint project, Neil Chapman, president of ExxonMobil said that a Gulf Coast chemical plant of this size and scale could compete internationally with other similar projects around the world.
“That is vitally important as most of the chemical demand growth in the next several decades is anticipated to come from developing economies,” he said.
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