Sabic, the Middle East’s largest petrochemicals company, has started commissioning activities and is preparing to start its joint venture project with energy major ExxonMobil in the US Gulf Coast.
The chemicals producer, which is majority owned by the world’s largest oil exporting company Saudi Aramco, established a petrochemical joint venture project with ExxonMobil in 2019, the Riyadh-based company said in a filing on Sunday to the Tadawul Stock Exchange, where its shares trade.
The project includes the establishment of an ethylene production unit with annual capacity of about 1.8 million tonnes, which will feed two polyethylene units and a monoethylene glycol unit, it said.
Saudi Aramco holds a 70 per cent stake in Sabic, in which it acquired shares worth $69.1 billion from the kingdom’s sovereign wealth fund, the Public Investment Fund, in 2019.
Sabic expects the project to have a positive impact on its consolidated financial statements after commercial operations begin, the company said.
“This project supports Sabic’s global growth strategy, diversifying its feedstock sources and strengthening its petrochemical manufacturing presence in North America for a wide range of products."
Sabic swung to profit in the second quarter this year, earning 7.64bn Saudi riyals ($2bn) after posting a 2.22bn riyals loss in the same period last year.
Saudi Aramco said in April this year that they would transfer the marketing and sales responsibility for a number of the oil company’s petrochemicals and polymers products to Sabic.
The companies will also designate the Aramco Trading Company to off-take and resell Sabic’s products.
The changes will be implemented in a phased manner this year and are subject to consent from both parties.
“The transfers reflect our shared commitment to capitalise on the complementary nature of Aramco and Sabic’s respective product portfolios as we strive to create added value for our customers and shareholders,” Ibrahim Al Buainain, Aramco Trading Company’s president and chief executive, said.
In April this year, Sabic shareholders also approved a dividend of 4.5bn riyals for the second half of 2020, taking the payout for the entire year to 9bn riyals.
Saudi Investment Recycling Company, a subsidiary of the PIF, signed an agreement with Sabic in April to set up a venture to use recycled plastic feedstock.
The agreement between the two companies also includes a feasibility study on the construction of a chemicals recycling plant in Saudi Arabia to convert mixed plastic waste into pyrolysis oil.
With its headquarters in Riyadh, Sabic has operations in more than 50 countries with 34,000 employees. In 2018, its consolidated production volume across its various business units was 75 million tonnes, and it recorded net income of $5.7bn, with annual sales of $45bn, and had total assets of $85bn.