A union of giants: Dow and Saudi Aramco recently announced the building of a joint-venture chemicals complex in Jubail Industrial City, Saudi Arabia, 100 kilometers northwest of Dammam. Aramco officials expect the project to be the first of its kind in the kingdom's fast growing chemical industry.
Midland, Michigan/USA & Dhahran/Saudi Arabia – The new joint venture, named “Sadara Chemical Company”, will operate a fully integrated chemicals park, consisting of 26 manufacturing units. The plans for this joint operation were recently approved by both companies' boards of directors after extensive feasibility studies. Front-end engineering and design efforts for this long term project were already started in 2007. Dow officials claim the planned project to be the largest ever integrated chemicals facility to be built in a single phase. The complex will possess flexible cracking capabilities and will produce over three million metric tons of high value-added chemical products and performance plastics, Dow says.
“Today’s announcement is outstanding proof of Dow’s ongoing commitment to our growth strategy,” said Andrew Liveris, Dow’s chairman and chief executive officer. “This premier partnership is the right economic ownership model with the right partner. It is designed to capture growth in the rapidly growing sectors of energy, transportation and infrastructure, and consumer products by creating a manufacturing hub that will provide a differentiated product slate and an advantaged cost position.”
Chemical Complex to Serve Emerging Markets
Company officials state plans to begin construction works immediately. Dow expects the first production units to come on line in the second half of 2015. Full operational status is expected by 2016. Once operational, Sadara is expected to deliver annual revenues of approximately $10 billion within a few years of operation. Total investment for the project, including third party investments, will be approximately $20 billion. Sadara will become an equal joint venture between Saudi Aramco and Dow after an initial public offering. In addition to equity from the partners, Export Credit Agencies and financial institutions will provide project financing to Sadara. "We are bringing the best of Dow’s technology-differentiated and globally leading products to Sadara. Customers in emerging geographies such as China, the Middle East, Eastern Europe and Africa will benefit from a strong supplier with feedstock integration, in-market commercial and supply capabilities, advanced technologies and resources to grow with their demand," Liveris added.
Trailblazer in the Middle East
On the joint venture with Dow Khalid Al-Falih, president and CEO of Saudi Aramco, commented, “We are pleased to have Dow as our partner, as they bring a fantastic record of success in the chemicals business and a top tier brand to the project. Dow also brings a superior mix of downstream product technologies, and world-class operational and marketing capabilities to the Sadara joint venture."
Al-Falih expect this project to act as a trailblazer for the rapidly growing Middle-Eastern chemicals industry: “Many of Sadara’s products will be produced for the very first time in Saudi Arabia. This enterprise will play a key role in the Kingdom’s industrial and economic diversification while contributing to the creation of thousands of high quality jobs. It will enable significant development in the country’s conversion industry"
With a world scale cracking unit, the complex will be able to process a wide range of feedstocks of Saudi Aramco’s extensive integrated hydrocarbon infrastructure. Utilizing Dow’s product technologies and Saudi Aramco’s project management and execution capabilities, the manufacturing units will produce performance products such as Polyurethanes (isocyanates, polyether polyols), Propylene Oxide, Propylene Glycol, Elastomers, Linear Low Density Polyethylene, Low Density Polyethylene, Glycol Ethers and Amines.
Marketing operations in eight Middle-Eastern countries will be undertaken by the new joint-venture company Sadara Chemical, while Dow will will market and sell Sadara products to all countries outside of the Middle East zone.