Page 5 - DMEA Week 18 2021

DMEA COMMENTARY DMEA

largest. This consumed 43.8% of the company’s and chemicals, which will reinforce SABIC as the
crude oil production during Q1, up from 35.5% chemicals arm of Saudi Aramco,” SABIC said.
during the same period in 2020. It will also sell benzene and methyl tert-bu-
Aramco and SABIC claim to have identi- tyl ether (MTBE) to Aramco, which in turn will
fied $3-4bn worth of overlaps and are working source European cracker feedstock and benzene
on integration. Meanwhile, during the nine for SABIC.
months following the closure of the deal they The news follows the March announcement
have achieved synergies of $156mn. that SABIC would take over the marketing of
Downstream has accounted for the majority polyutheranes, chemical products and poly-
of Aramco’s growth in recent years and the com- ethylene produced by the Jubail-based Sadara
pany’s focus on improving synergies is only likely Chemical Co. joint venture (JV) between Ara-
to continue. mco and Dow Chemical of the US as of July 1.
It has committed to complete the spin-off of This week’s arrangement between Aramco
its downstream activities into a wholly owned and SABIC will also see responsibilities for the
subsidiary within the next three years, otherwise Pengerang Petrochemical Co. (PRefChem) in
it will be liable for five years of retroactive taxes Malaysia, Sadara and Korean refiner S-Oil trans-
relating to its downstream operations charged at ferred to SABIC.
an additional 30-65% to the 20% it has already “The financial performance of SABIC
paid. improved in the first quarter of 2021 compared
with the previous quarter due to increased mar-
SABIC synergies gins driven by higher product prices, supported
Also this week, Aramco announced that SABIC by a rise in [the] oil price, healthy demand and
would assume responsibility for selling the tightness in the supply for most of the key prod-
majority of the Dhahran-based firm’s chemicals ucts,” the company said in an official statement.
and thereby effectively becoming Aramco’s pet- Despite its immense scale – nearly 1.7mn tpy
rochemicals trading arm. of petchems production – delays and accidents
SABIC will begin trading around 5.4mn tpy at PRefChem have been a headache for Aramco
of Aramco’s chemicals and polymer products, since its inception, and passing operational
while Aramco Trading will continue to sell fuel responsibility on to SABIC is likely to be a relief
products. The chemicals specialist said that the in certain areas.
move would provide it with around 900,000 tpy While Aramco has clearly run a successful
of products for sale. refining business for decades, these moves will
“The new capacities include polyurethane, apportion responsibility to areas of the wider
propylene oxide and butyl glycol ethers, which business that fit with their strategic focus and
will expand our product portfolio. We expect allow the parent to tackle emerging areas of
our global market share to increase in polymers interest such as hydrogen.™

Week 18 06•May•2021 www. NEWSBASE .com P5