Bidding Closed for SABIC/ExxonMobil Chemical Rubber Plant Project in Saudi Arabia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Bidding for the first contract for the joint venture chemical rubber plant between Saudi Basic Industries Corporation (SAU:2010) (SABIC) (Riyadh, Saudi Arabia) and ExxonMobil Chemical Company (Houston, Texas), a subsidiary of Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), closed December 15.

The contract is for the storage tanks and spheres at the synthetic rubber plant to be constructed in Al-Jubail, Saudi Arabia. Three companies are understood to have made bids for the contract: Chicago Bridge and Iron Company NV (NYSE:CBI) (Amsterdam, Netherlands); Petro Steel Company Limited, a 50:50 joint venture between Rotary Engineering Limited (SIN:R07) (Singapore) and the Saudi Rafid Group (Al Khobar, Saudi Arabia); and the Yanbu Steel Company (Yanbu Al Sinaiyah, Saudi Arabia).

The storage spheres are pressurized tanks used to store gases in a liquefied state, while the standard storage tanks are at atmospheric pressure and are used for storage of petroleum and petrochemicals. Originally, the contract was to have closed on November 27.

Contracts for the main packages of the project, including the construction of a methyl tertiary butyl ether plant and a halobutyl rubber plant, are expected to be announced early next year, possibly in January as indicated by Exxon and SABIC.

The plans to build synthetic rubber plants were first announced by SABIC and Exxon in 2006 and reconfirmed in November 2008, when a contract was signed for two elastomer projects. The projects are planned for two joint venture petrochemical complexes: the Al-Jubail Petrochemical Company, known as Kemya and located in Al-Jubail, and the Saudi Yanbu Petrochemical Company, known as Sanpet and located in Yanbu.

The Kemya project will include a vocational training institute and a products application and development support center. The facility is aligned with the Saudi Arabia National Industrial Cluster Development Program, which is responsible for the diversification and expansion of the manufacturing sector.

The planned rubber complex is expected to have a production capacity of about 400,000 tons per year of carbon black, rubber and specialty thermoplastic polymer compounds. In October this year, Marc Granier, vice president of Exxon in Saudi Arabia, estimated the total investment in the plant at about $5 billion. A final investment decision is expected to be made in 2010 or 2011. The output from the plant is destined for the Saudi Arabian tire industry.

SABIC operates 20 petrochemical complexes in Saudi Arabia. Of these, 19 are located in the industrial cities of Yanbu and Al Jubail. In addition to the joint venture with Exxon, SABIC has also partnered with multi-national companies such as Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) and the Dow Chemical Company Limited (NYSE:DOW) (Midland, Michigan).

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