Saudi Arabia: Business Strategy Aramco, Sabic Realign Marketing, Commercial, Supply Chain Activities
Under the new business strategy, Sabic will focus on petrochemicals and the Aramco Trading Company will focus on fuel products. Aramco acquired a 70 % stake in Sabic in June 2020 and now aims to make Sabic its chemicals arm.
Riyadh/Saudi Arabia – Aramco and Sabic have recently announced their intention to transfer the marketing and sales responsibility for a number of Aramco petrochemicals and polymers products to Sabic, and the offtake and resale responsibility of a number of Sabic products to Aramco Trading Company (ATC).
The effect of these changes, planned to be implemented on a phased basis during 2021, subject to the necessary consents being obtained, will ensure that Sabic focuses on petrochemicals products and ATC on fuel products.
This is a significant step in aligning the Aramco and Sabic strategies, following Aramco’s acquisition of a 70 % stake in Sabic in June 2020. Aramco and Sabic will continue to review options for further global marketing and sales transfers across product-producing companies within the Aramco group portfolio.
The changes will drive further operational efficiencies, strengthen the brands of both companies and their combined products and services offering, and help to maintain competitiveness. Customers will benefit from improved product range and availability, ordering and points of sale, supply chain, shipping reliability, and after-market services and solutions.
Ibrahim Al-Buainain, Aramco Trading Company President and CEO, said: “The transfers reflect our shared commitment to capitalize on the complementary nature of Aramco and Sabic’s respective product portfolios as we strive to create added value for our customers and shareholders.
“Together, Aramco Trading Company and Sabic are focused on providing world-class products and service offerings. These changes will place us in an even stronger position to deliver market-leading innovation and value.”
Abdulrahman Al-Fageeh, Sabic Executive Vice President - Petrochemicals, said: “By leveraging and optimizing our complementary combined product portfolios we will create a one-stop shop for the benefit of our customers globally, including in strategically important geographies, especially across Asia.
About the marketing and sales transfers and changes
Responsibility for the global marketing and sales of certain Aramco petrochemicals and polymers products and those of its joint ventures and affiliates will be transferred to Sabic, initially focused on: Prefchem (Pengerang Petrochemical Company); Sadara (Sadara Chemical Company); and, S-Oil Corporation (S-Oil Corporation, South Korea).
After completing the consolidation of petrochemical products, Sabic will market the following products, which include both existing products and extensions to its portfolio: HDPE, LLDPE, LDPE, PP copolymer, PP homopolymer, PP terpolymer, ethylene vinyl acetate copolymer (EVA), PMMA, PA6, MEG, DEG, TEG, Mono-Ethanolamine (MEA), Di-Ethanolamine (DEA), Tri-Ethanolamine (TEA), Ethylene diamine (EDA), Diethylenetriamine (Deta), ortho-Toluenediamine, Polymeric Methylene Diphenol Diisocyanate (PMDI), Toluene diisocyanate (TDI), Propylene Glycols, Polyols, Propylene Oxide, MMA, Butyl Glycol Ether, Acetone and Phenol.
In parallel, responsibility for offtake, resale and sourcing of a number of existing Sabic fuel products (Benzene, MTBE, gasoline blending components and EU cracker feedstocks) will be transferred to ATC. The sales of Aramco’s Para-Xylene will remain with the ATC.
A number of marketing and sales transfer exclusions currently apply, and there are therefore no changes planned to the following:
- Aramco: excess production of Olefins
- Arlanxeo: portfolio products (rubber and elastomer)
- Motiva: portfolio products (cyclohexane, propylene and ethylene)
- S-Oil: responsibility for domestic marketing and sales in Korea
About the commercial and supply chain activity transfers and changes
Responsibility for the commercial aspects of liquid bulk marine shipping services will be consolidated under ATC (including chemicals and feedstock), while responsibility for the shipping of all solid products and customer product delivery will be consolidated under Sabic.