Korean and Saudi Arabian petrochemical companies are setting up an increasing number of joint ventures in Saudi Arabia, the world’s-largest petroleum producing country.
Hanwha Chemical is planning to start commercial production in the ethylene vinyl acetate (EVA) plant it built with private chemical company Sipchem. The factory, located in the Jubail Petrochemical Complex in the northern region of the country, has an annual production capacity of 200,000 tons.
SK Global Chemical, in the meantime, signed a joint venture agreement (JVA) last month with Saudi Basic Industries Corporation (SABIC) for the manufacturing and global marketing of Nexlene, which is a type of high-performance polyethylene. The contract amount reaches 610 billion won in total.
“We have manufactured only universal products so far but the JVA will be a cornerstone for our expansion into the high value added market,” said SK Innovation, adding, “We are looking forward to a great opportunity because Saudi Arabia is a country particularly competitive in ethylene cracker production.”
The close cooperation between the Korean and Saudi Arabian petrochemical firms is attributable to the Saudi Arabian government’s petrochemical industry promotion policy. The government is trying to foster the growth of the industry so that it can go beyond the export of crude oil. It is planning to work more closely together with foreign companies for technology transfer and private investment attraction.
At present, non-Saudi Arabian petrochemical corporations doing business in Saudi Arabia include Exxon Mobil, Chevron, Dow Chemical, Mitsubishi, BASF, Shell and Sinopec. The private sector’s ratio to the industry jumped from 5 percent to 25 percent or so between 2006 and 2010, too.
Under the circumstances, Korean companies are also riveting their eyes on the country as a manufacturing base guaranteeing price competitiveness and the procurement of inexpensive raw materials.