RIYADH: The Saudi Basic Industries Corporation has given the green light for a $6.4 billion investment to build a petrochemical complex in Fujian, strengthening its partnership with China.
The company said in a disclosure to the stock exchange that the project will be developed in cooperation with Fujian Fuhua Guli Petrochemical Company, and construction is scheduled to begin in the first half of 2024.
Subsequently, preparations for commissioning and start-up will begin in the second half of 2026, for a period of six months. The complex is expected to begin commercial production by the first half of 2027, supporting SABIC's expansion into the Asian market.
SABIC Industrial Investment Company, a wholly-owned subsidiary of the company, will lead the project and will hold a 51 percent ownership stake, while the Chinese entity will hold a 49 percent stake.
First proposed in 2018, the concept has gained momentum with the signing of a memorandum of understanding with Fujian Province in China. The document set out the framework for cooperation between the two parties, enabling SABIC to move forward with the development of a large-scale petrochemical complex in the Chinese city.
The facility will include a mixed-feed steam cracker, and its annual ethylene production capacity is expected to reach 1.8 million tons.
In addition, the project will include advanced facilities for the production of ethylene glycol, polyethylene and polypropylene, along with polycarbonate and various other units.
These facilities will include nine technologies from SABIC, the leading company in this field.
The company said that financial results are expected to be achieved after the completion of commercial production, expected in the first half of 2027.
The filing added that this project is in line with SABIC's goal of diversifying the company's raw material sources and expanding its industrial presence in Asia, an important market for a wide range of products.
The statement added that Aramco Trading Company, a related party, is wholly owned by Saudi Aramco, which owns a 70 percent stake in SABIC through one of its subsidiaries, Aramco Chemical Company.
SABIC will finance the project through a combination of debt and the company's cash flows.
This announcement comes on the heels of a series of similar investments made by Saudi Aramco in China's manufacturing sector.
In early January, privately owned Chinese refiner Rongsheng Petrochemical and Aramco revealed ongoing talks to mutually acquire a 50% stake in their respective refineries in China and Saudi Arabia.
The Saudi energy company had previously revealed its agreement to acquire a 10% stake in Rongsheng, a project linked to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Company. The deal was concluded in July last year for $3.4. one billion.
