Saudi Basic Industries SJSC

King Salman, President Trump mark agreement between SABIC and ExxonMobil to conduct study on potential petrochemical project in US

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz and US President Donald Trump today marked the agreement signed by affiliates of SABIC and ExxonMobil to conduct a detailed study of a potential jointly-owned petrochemical complex in San Patricio County, Texas, USA.

Yousef Al-Benyan, SABIC Vice Chairman and CEO, and Philippe Ducom, ExxonMobil Saudi Arabia Chairman, CEO, and President, signed the agreement on behalf of their respective affiliates. The agreement was one of several agreements finalized between Saudi and US companies during President Trump's visit to the Kingdom.

The agreement spells out the intention of the two companies to complete their joint study of the complex, building upon the 35-year relationship between the two companies. SABIC and ExxonMobil currently operate two joint ventures in Saudi Arabia; the San Patricio complex under study would be their first joint venture in the US.

Following the signing of the agreement, Prince Saud bin Abdullah bin Thenayan Al-Saud, President of the Royal Commission for Jubail and Yanbu and Chairman of SABIC said, 'This is one of the most important agreements signed during the US President's visit. In line with Saudi Vision 2030, it is intended to open avenues to supply new markets. The future looks promising for the Vision and for the leadership of the two countries.'

Al-Benyan also praised the agreement, saying that it will contribute towards increased cooperation between SABIC and ExxonMobil. 'It marks a new opportunity for the two companies to continue our historic collaboration, which goes back to 35 years, and builds on our long-term relationship. We hope this potential first-ever joint venture with ExxonMobil in the US will lead to additional promising projects that meet the aspirations of the leadership and peoples of Saudi Arabia and the US.'

The agreement covers conducting studies on the engineering design for the prospective petrochemical complex, as well as assessment of the project's various technical and commercial aspects. It also covers the business mechanisms between both the companies in the coming period. The potential petrochemical complex is projected to have a world-class ethane cracker with a production capacity of 1.8 million tons of ethylene per year to feed a monoethylene glycol unit and two polyethylene units - subject to the outcome of the ongoing studies. A final decision on this project is expected to be made some time in 2018.

SABIC and the ExxonMobil Chemical Company had announced last month that they had identified a site in San Patricio County, Texas for the potential project. The 1300-acre site is located in an area rich in natural gas liquids feedstock, with the infrastructure necessary for the project's operation.

The potential project reflects SABIC's focus on geographic diversification to supply new markets. The proposed venture will capture competitive feedstock, capitalize on the growing global demand for ethylene-based products, allow SABIC to get closer to its customers, and reinforce its strong position in the value chain. The project will further enhance SABIC's growth in key markets in line with its 2025 strategy, which in turn, is aligned with Saudi Vision 2030.

The potential venture is one of SABIC's most important expansion projects, along with its oil-to-chemicals joint venture with Saudi Aramco, coal-to-chemicals joint venture with Shenhua Ningxia Coal Industry Group Co. Ltd., and strategic cooperation agreement with Sinopec in China. These agreements are geared towards achieving the company's 2025 strategy, and supporting the localization efforts of downstream industries in Saudi Arabia. The expansion projects are expected to create new job opportunities and boost the national economy in realization of the National Transformation Program 2020 and Saudi Vision 2030.