A new petrochemical venture based in Saudi Arabia will focus on the local Saudi market, rather than the business of foreign exports, as part of its “long term, strategic aim,” the head of Saudi Aramco, Khalid al-Faleh, said.
Faleh spoke after the $20 billion joint venture was signed between the state-owned oil giant Saudi Aramco and the U.S.-based Dow Chemical company to launch a new business called Sadara, which will be based in Jubail, an industrial city in Saudi Arabia.
Sadara plans to produce 3 million tons of chemical products a year, and officials had previously said that the company hopes to make annual sales of $10 billion within a few years of operation.
“Aramco’s share will be 35 percent, while Dow will have the same share. The remaining 30 percent will be put up for public subscription in the financial market,” Khalid al-Faleh said in a video interview with Al Arabiya correspondent Aqeel Bukhamsin.
When asked whether Sadara will compete with leading Saudi petrochemical company SABIC, Faleh said that the new venture would “support SABIC rather than become its rival.”
The Saudi oil heavyweight Aramco is already committed to major petrochemical joint ventures in Saudi Arabia; in 2005 it created Petro Rabigh, a $10 billion project, with Japanese company Sumitomo Chemical.
Al-Faleh said that Aramco’s interest in the petrochemical sector has proved successful successful through Petro Rabigh, which makes 1.3 million tons of ethylene and 900,000 tons of propylene per year at 23 plants.
The Aramco chief said that Sadara’s products will “complement” those of SABIC, adding that he hopes this will introduce more opportunity for investors in the Saudi market.
“We will be able to compete with what is available in rival European and American markets,” al-Faleh said.
The Aramco head said that he was optimistic the project would be a success, despite a depressing global economic backdrop.
"I think the recent economic problems [in Europe and America] will have no impact on the venture. Our strategic goal in the long run is that our product is consumed entirely by the local market, and we have already signed agreements with local consumers.”
Al-Faleh said he hopes the local market will consume 20 to 30 percent of the company’s production during the first three years of business.