Page 16 - DMEA Week 31

DMEA PETROCHEMICALS DMEA

Aramco and partners axe Saudi

rubber project

SAUDI ARABIA SAUDI Aramco, Russia’s Sibur and France’s heavy reliance on crude oil exports.
Total have dropped plans for a petrochemical However, the petrochemicals market is
The project was to project in Saudi Arabia, owing to current mar- currently oversupplied, due to extra capacity
be implemented in ket conditions. coming on stream over the last two years and
the eastern port of Al The trio had planned to establish synthetic weaker-than-expected growth in key Asian
Jubail. rubber production in the eastern Saudi port of markets. The COVID-19 pandemic and result-
Al Jubail – a project similar in scope to a 120,000 ing economic collapse have made matters worse.
tonne per year (tpy) rubber plant Sibur is build-
ing in India. More SABIC losses
“We, together with Aramco and Total, have SABIC suffered its third quarterly low in a row
now stopped studying this project,” Sibur chair- in the three months ending June 30, it reported
man Dmitry Konov told investors on August 4. on August 6. Low prices and weak global
Aramco is eager to build up its petrochem- growth mean the second half of the year will
icals business, having recently closed its $69bn likely be as gruelling as the first, the company
takeover of polymer giant SABIC. Sibur, mean- warned.
while, is spearheading the expansion in Russian The producer reported a net loss of SAR2.2bn
petrochemicals production. It wants to export its ($587mn) for the three months, on further
synthetic rubber technology because of low feed- impairments and a drop in sales. CEO Yousef
stock availability in Russia, and weak domestic al-Benyan said the pandemic’s impact was most
demand growth. severe in the second quarter, and that SABIC
Aramco, on the other hand, has good feed- might see some improvement in July and August.
stock availability and the capacity to export pro- “Hopefully this is something positive, but
duced rubber to growing markets in Asia. other challenges still persist,” he told investors in
The pair signed a memorandum of under- an earnings call. “The future of demand is driven
standing (MoU) in autumn 2017 on co-operat- by uncertainties in the energy market. Mar-
ing in the petrochemicals field, both in Russia ket conditions are going to put pressure on the
and Saudi Arabia. Financing for initiatives was to chemical industry for the remainder of the year.”
come from the Russian Direct Investment Fund SABIC booked SAR1.18bn in impairments
(RDIF). on capital assets in the quarter, while also report-
Aramco views petrochemicals as a strong ing both a 27% year-on-year decline in petro-
long-term pocket for growth in oil and gas chemicals prices and smaller sales volumes. A
demand. It also wants to diversify away from year ago it posted a SAR2.03bn profit. ™

P16 www. NEWSBASE .com Week 31 06•August•2020