RIYADH: Saudi Basic Industries Corp. (SABIC) remains upbeat on a proposed petrochemical venture in the United States with Exxon Mobil and a preliminary investment decision could be made within months, SABIC’s chief executive Yousef Al-Benyan said.
Last July SABIC, one of the world’s largest petrochemicals groups, said it was studying whether to build a petrochemical complex on the US Gulf Coast with an Exxon affiliate. The project would supply ethylene to other units making derivatives.
The SABIC CEO said on Thursday that he would travel to the US at the end of this month to look at the proposed project.
“The outlook is still very positive...We will be working with Exxon Mobil to come up with a very strong competitive structure of this project.
“We are very excited about current developments with Exxon Mobil, not only the cracker but also in the downstream type of projects we are going to do.”
He added that SABIC would probably make an announcement about the ethylene project in the second quarter of this year, though this was not certain.
SABIC is keen to invest abroad to diversify its risks and improve its access to foreign markets. Benyan said the company was looking to make other US investments worth between $2.5 billion and $3 billion.
“We think SABIC needs to strengthen its position in the US and leverage the current growth of demand for our commodity business.”
He said: “Some of them will be partnerships and some will be alone, because I think we in SABIC have the capability to do that ourselves.”
Asked about the outlook for SABIC’s sales in the US under President-elect Donald Trump, who has pledged to promote local companies, Al-Benyan said that because of its US facilities, SABIC viewed itself as a local manufacturer.
He also said he did not at present see any risk to SABIC’s assets from last September’s vote in the US Congress to allow relatives of victims of the Sept. 11 attacks to sue Saudi Arabia.
“This is part of our continuous risk assessment that we have within our corporate finances, but at this point we don’t see any problem, and this will never really change our mind about growing our business in the US.”
Also on Thursday, SABIC gave further evidence of a recovery in the petrochemical sector with its first profit rise in 10 quarters.
Among nearly a dozen Saudi petrochemical companies that have reported fourth-quarter results, most have posted higher earnings.
SABIC’s net profit jumped 47.7 percent from a year earlier to SR4.55 billion ($1.21 billion) in the three months to Dec. 31. SABIC said its performance was the result of aggressive cost-cutting.
Fourth-quarter sales edged down to SR34.03 billion from SR34.16 billion a year ago, but the CEO told a news conference that he thought business would improve.
“We think 2017 will be positive compared to 2016 because of growth in major economies, the US, China. There are sort of challenges in the European market on the back of Brexit, but generally we expect the performance of the European market to be similar to 2016.”
The CEO added that he was optimistic oil prices would meet international analysts’ expectations of around $45 to $55 a barrel this year, which would be positive for SABIC’s business. Last year, Brent crude averaged about $45.
Asked about SABIC’s outlook in the US, the CEO said he was confident of expanding business there.
He also said his company had no plans to suspend domestic projects despite financial pressures on Riyadh due to low oil prices.
A feasibility study for a multi-billion dollar oil-to-chemicals project with Saudi Aramco is progressing well, he added. A pre-front end engineering and design contract, marking the start of the preliminary engineering phase of the project, is expected to be awarded this year.
Benyan said SABIC had no plan for any new borrowing. In fact, the company is deleveraging, said chief financial officer Mosaed Al-Ohali; Benyan said it would pay down SR13 billion of debt maturing this year.
SABIC still keen on Exxon venture in US
SABIC still keen on Exxon venture in US
