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SABIC and Shell to expand Sadaf joint venture

SABIC and Shell to invest in and beyond Saudi Arabia

In November 2012, Saudi Basic Industries Corporation (SABIC) and Shell have decided to work on expansion opportunities of their joint venture Saudi Petrochemical Company (Sadaf).

These expansion ambitions are not limited to the sole Saudi Arabia but should also aim at increasing positions in overseas markets.

Sadaf is a 50/50 joint venture between SABIC and Shell.

Established in 1980 to begin production in 1984, Sadaf is the oldest petrochemical joint venture in Saudi Arabia.

Through Sadaf, SABIC and Shell operates only one complex located in Al Jubail Industrial Zone to benefit from the most competitive feedstock available in the region.

Actually Sadaf produces 4.7 million t/y of petrochemical products including crude industrial ethanol, ethylene, ethylene dichloride (EDC), caustic soda, methyl tertiary butyl ether (MTBE), styrene monomer.

Based along the Coast of the Eastern Province on the Arabian Gulf, Sadaf export most of its production to the Asia Pacific region.

In few years SABIC emerged among the market leaders in the petrochemical industry especially after the acquisitions of the chemical activities of DSM in Europe and the plastics division from GE.

Today SABIC is a world key player in polyethylene, polypropylene, glycols, methanol, fertilizers and advanced thermoplastics.

As part of its Strategy 2020, SABIC intents to expand its market leadership through two dimensions:

 – Enlarge its products portfolio with higher added value petrochemicals and innovative plastics

 – Consolidate its global footprint such as in China in joint venture with Sinopec

On Shell side, the Chemicals branch is the sixth largest chemical company in the world by the revenues with one of the longest list of proprietary processes and patents.

On the same month of November, Shell confirmed its strategy to develop a sustainable and profitable growth through an integrated business model upstreamdownstream.

This position, aligned on the national oil companies, opens the opportunity to Shell, as gas specialist, to take advantage of the low prices of the natural gas to increase its added value along the downstream transformation.

SABIC and Shell plan polyols and SMPO in Al Jubail

Coming from different horizons, SABIC and Shell come to have similar goals and complementary interests to develop their joint venture:

 – For SABIC, to get access to Shell technologies catalog and experience on a global base.

 – For Shell to team up with a reliable partner to invest in large projects and to enjoy competitive supply on oil and gas whatever would happen in the rest of the world.

In this context the expansion of Sadaf joint venture is a perfect answer to SABIC and Shell respective goals.

As a  first step, SABIC and Shell are panning to develop the production of polyols and styrene monomer propylene oxide (SMPO).

To maximize their competitive advantage, SABIC and Shell are planning this expansion in the actual Sadaf Al Jubail facilities.

These polyols and SMPO production units should be the first ones in the Middle East and would help Saudi Arabia to reduce its imports of these added value chemicals building blocks.

Polyols is the critical feedstock to produce polyurethane.

Together with the SMTO, the development of polyurethane production in Saudi Arabia  will meet the local and global demand for all kind of applications in the building and construction, automotive, furniture, packaging, insulations.

From this announcement, SABIC and Shell are proceeding to the feasibility studies of this Sadaf expansion to produce Polyols and styrene monomer propylene oxide (SMPO) in their Al Jubail facilities as first step before going global.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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