SABIC Moves Ahead With $6.4bn Petrochemicals Project in China

SABIC, the Middle East’s biggest petrochemical producer, announced the final investment decision for its $6.4 billion petrochemicals complex in Fujian, China.

The FID will allow SABIC to move ahead with its 49 percent stake partner Fujian Fuhua Gulei Petrochemical to build the project with a mixed feed steam cracker with a production capacity of up to 1.8 million mt/year of ethylene, along with ethylene glycol, polyethylene, polypropylene, and polycarbonate, SABIC said in a January 22 statement to the Saudi stock exchange.

SABIC started considering the project in September 2018 when it signed a memorandum of understanding with the Fujian Province.

SABIC, which is 70 percent owned by Saudi Aramco, controls the other 51 percent of the petrochemicals project.

Construction is expected to begin in the first half of this year, with startup in the second half of 2026 to last for six months, SABIC said.

“This project aims to support SABIC’s aspiration in diversifying the company’s feedstock sources and expanding its manufacturing presence in Asia as a key market for a wide range of products,” SABIC said, adding that Aramco Trading is a “related party.”

Global demand

Global ethylene demand will grow 3.1 percent per year by 2027, with consumption in northeast Asia up 3.9 percent per year and in Africa up 14 percent per year, according to a September report by S&P Global Commodity Insights. China has added more than 220 million mt of primary petrochemical capacity since 2000, it noted.

According to the report, ethylene capacity has grown from new plants in North America and northeast Asia, leading to declining operating rates during the past three years. In 2022 the global industry-wide utilization rate was estimated at 85 percent. Global ethylene trade is usually in the form of its derivatives, such as polyethylene, PVC, ethylene oxide, and ethylene glycol.

Several Saudi companies, including Saudi Aramco and SABIC, have petrochemical investments in China, where demand for these products was set to rise before COVID-19.

In January, Aramco and Rongsheng Petrochemical announced talks for the Chinese private refiner to buy a 50 percent stake in Saudi Aramco’s Jubail refinery. Rongsheng is also negotiating to sell Aramco up to a 50 percent stake in its unit Ningbo Zhongjin Petrochemical, allowing the two sides to upgrade the existing facilities and jointly develop Rongsheng’s new materials project.

SABIC also last year started commercial operation of its new polycarbonate plant at the Sinopec SABIC Tianjin Petrochemical joint venture.