Last year state-owned petrochemicals and industrial conglomerate Saudi Basic Industries Corporation (SABIC) rolled out its 2025 Strategy, which looks at dozens of options and is based to a large extent on investing overseas. At home the company faces feedstock restrictions due to the kingdom’s gas shortage, and the fact that its competitor and supplier Saudi Aramco has “more weight” as one industry insider puts it. Nevertheless, SABIC’s overseas investments are expected to be less profitable than those inside Saudi Arabia.
In formulating its strategy SABIC focused on population growth – most demand is driven by it – and the trend for urbanization. Demand for low cost cars, water and housing (which increasingly uses petrochemicals-based insulation materials) is growing rapidly in developing countries, and in particular China and India. SABIC has identified 35 countries that can supply advantaged feedstock and five or six that also have the urbanization and large population growth that will drive demand. It has also pinpointed countries neighboring these key targets that match some of its requirements: Myanmar, for example has raw materials and lies next to India, which has demand growth but lacks feedstock. SABIC is also targeting North America, having identified a lack of integration among plastics producers. It is looking at Canada as well as the US. (CONTINUED - 1307 WORDS)