With JV, Sabic makes bold move for North American petchem markets
Wednesday August 3, 2016
Leave it to ExxonMobil Chemical and Sabic to do it big.
The global petrochemical heavyweights made headlines recently in announcing they are considering a joint venture for a multibillion-dollar petrochemical complex in the US Gulf Coast region.
How big are we talking? The project would be anchored by a 1.8 million mt/year ethylene-capacity steam cracker — which would make it the largest such plant in the world — and also include polyethylene and monoethylene glycol production.
Potential locations include South Texas, near Corpus Christi, as well as Louisiana, near Plaquemine. This is key as both areas are home to refining and petrochemical clusters.
Corpus Christi has easy access to abundant feedstock from the Eagle Ford shale play as an added bonus, given the project under consideration would use ethane to feed the cracker.
For those keeping track of the shale-fueled petrochemical boom in North America, Sabic’s proposed incursion should come as no surprise.
The Saudi Arabia-based company has been trying to expand its footprint in North American olefins and polymers markets for some time. For the past 3-5 years, market participants deemed Sabic, already one of the world’s largest petrochemical and plastic resins producers, as a prime candidate to partner on a major petrochemical project in the US.
In the US, Sabic, which is 70% controlled by the Saudi government, first made a splash in 2007 with the acquisition of GE Plastics for $11.6 billion. The company renamed it Sabic Innovative Plastics before dissolving it in 2015 in a reorganization.
The company also operates a styrene plant in Carville, Louisiana as part of a joint venture with Total Petrochemicals and has an 11.5% stake in an olefins complex operated by Williams in Geismar, Louisiana.
A JV with ExxonMobil Chemical, another major player in the polymer resins space, would allow Sabic to penetrate North American polyethylene markets as a producer, one able to cash in on the region’s feedstock advantage.
Sabic is not the only Saudi company eyeing the region for expansion.
Aramco, the energy conglomerate owned by the Saudi government,...