Aramco, Dow announce joint venture chemicals project

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 26 -- Saudi Aramco and Dow Chemical Co. reported the approval of the formation of a joint venture to build and operate a world-scale, fully integrated chemicals complex at Jubail Industrial City in Saudi Arabia.

Aramco Chief Executive Officer Khaled Al Falih said the venture with Dow would “enable significant development in the country's conversion industry, thereby supporting Saudi Arabia's ambition to be a magnet for downstream manufacturing investments that add significant value to the kingdom's hydrocarbon resources.”

The companies said authorization for the JV, to be called Sadara Chemical Co., comes after an extensive project feasibility study and front-end engineering and design effort that began in 2007.

Sadara, an Arabic word meaning “in the lead,” should have annual sales of $10 billion within a decade of opening and create thousands of jobs, the companies said.

Comprised of 26 manufacturing units building on Aramco’s project management and execution expertise, and utilizing many of Dow’s technologies, the complex will be one of the world’s largest integrated chemical facilities, and the largest ever built in one single phase.

The complex will possess flexible cracking capabilities and will produce more than 3 million tonnes/year of chemical products and performance plastics.

The manufacturing units will produce a wide range of performance products such as polyurethanes (isocyanates, polyether polyols), propylene oxide, propylene glycol, elastomers, linear low-density polyethylene, low-density polyethylene, glycol ethers, and amines.

Construction will begin immediately and the first production units will come on line in second-half 2015, with all units expected to be up and running in 2016.

Total investment for the project, including third-party investments, will be $20 billion. Sadara will become an equal venture between Aramco and Dow after an initial public offering.

Sadara will have responsibility for product marketing within a local zone of eight countries. Dow will market and sell on behalf of Sadara to all countries outside of the Middle East.

Contact Eric Watkins at hippalus@yahoo.com.

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