Sipchem Signs Technology License Agreement with ExxonMobil

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi International Petrochemical Company (SAU:2310) (Sipchem) (Al-Khobar, Saudi Arabia) recently entered into a technology license agreement with ExxonMobil Chemical Technology Licensing LLC (Houston, Texas), a part of Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), to use the latter's high-pressure tubular technology for the production of low-density polyethylene (LDPE) at Sipchem's upcoming ethylene vinyl acetate (EVA) plant.

SIPCHEM is developing an EVA plant with a capacity of 200,000 tons per year in Jubail Industrial City. The plant is scheduled for commissioning in 2013 and will operate on a feedstock of ethylene olefin and vinyl acetate monomer.

The EVA plant is one among the nine new projects for production of specialty petrochemical products that will be jointly developed by Saudi Basic Industries Corporation (SAU:2010) (SABIC) (Riyadh, Saudi Arabia) and Sipchem under a memorandum of understanding signed earlier this month. According to the memorandum, SABIC will undertake the cracking of ethane feedstock provided by the Saudi Arabian Ministry of Petroleum and supply ethylene olefin to Sipchem.

The second feedstock for the EVA plant, vinyl acetate monomer, will be procured from International Vinyl Acetate Company (IVC) (Al-Jubail, Saudi Arabia), which is scheduled to commence production of 330,000 tons per year of vinyl acetate monomer in September 2009. IVC is one of five affiliate companies of Sipchem operating in Al-Jubail. The affiliate firms produce acetic acid, butanediol, carbon monoxide, methanol, and vinyl acetate monomer.

ExxonMobil's high-pressure tubular technology is less expensive than the use of gas-phase reactors for production of LDPE. The technology enables production of homopolymer LDPE with density levels in the range of 0.915-0.935 and can also be used to produce EVA copolymers with a weight composition of up to 20%. The high-pressure tubular technology is touted to have several advantages such as production of very high clarity grades of LDPE, and advanced product customization capabilities to yield a range of polymer grades for various applications.

ExxonMobil currently operates 12 production lines in Belgium, China, Malaysia, Saudi Arabia and the U.S. based on the high-pressure tubular technology, producing 1.8 million tons per year of LDPE. The firm operates one production line with a capacity of 240,000 tons per year in Al-Jubail. The unit commenced operations in the year 2000.

Sipchem plans to make investments to the tune of $3.47 billion by 2013 in order to increase its production capacity of petrochemical products to more than 2.5 million tons per year. In addition to the EVA plant, Sipchem is setting up a 125,000-ton-per-year polyvinyl acetate plant in Al-Jubail under the Memorandum of Understanding with SABIC. Development of the two plants is expected to entail an investment of $810 million.

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