RIYADH: Saudi Basic Industries Corp. has given its go-ahead for a $6.4 billion investment to build a petrochemical complex in Fujian, solidifying its partnership with China.
To be developed in collaboration with Fujian Fuhua Gulei Petrochemical Co., the project is scheduled to commence construction in the first half of 2024, the company said in a bourse filing.
Subsequently, preparations for commissioning and start-up will begin in the second half of 2026, lasting for six months. The complex is expected to initiate commercial production by the first half of 2027, supporting SABIC’s expansion in the Asian market.
Spearheading the project, SABIC Industrial Investment Co., a wholly-owned subsidiary of the company, will hold a 51 percent ownership stake, while the Chinese entity will have a 49 percent share.
First proposed in 2018, the concept gained traction with the signing of a memorandum of understanding with Fujian province in China. The document outlined the cooperative framework 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, projecting an annual ethylene capacity of up to 1.8 million tons.
Additionally, it will house advanced downstream facilities for ethylene glycols, polyethylene, and polypropylene, along with polycarbonate and various other units.
These facilities will incorporate nine technologies from SABIC, a leader in the field.
The company said the financial results are expected to be realized after the completion of commercial production, anticipated in the first half of 2027.
This project aligns with SABIC’s goal of diversifying the company’s feedstock sources and expanding its manufacturing presence in Asia, a crucial market for a wide range of products, the filing added.
The release added that Aramco Trading Co., a related party, is wholly owned by Saudi Aramco, which holds a 70 percent ownership in SABIC through one of its subsidiaries, Aramco Chemicals Co.
SABIC will finance the project through a combination of debt and the company’s cash flows.
The announcement follows a series of similar investments by Saudi Aramco in China’s downstream sector.
In early January, Chinese privately-controlled refiner Rongsheng Petrochemical and Aramco revealed ongoing talks to mutually acquire a 50 percent stake in each other’s refineries in China and Saudi Arabia.
The Saudi energy firm had previously disclosed its agreement to acquire a 10 percent stake in Rongsheng, a venture linked to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp. The deal concluded in July last year with a valuation of $3.4 billion.