Saudi Basic Industries Corporation (Sabic), the Middle East's biggest petrochemicals company, has finalised the investment of 44.8 billion yuan ($6.4 billion) in a joint venture in China.
The investment in the Sabic Fujian petrochemical complex is a significant expansion of Sabic's core investments in the world’s second-largest economy, the company said on Monday.
“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”, it said in a filing to Saudi Arabia’s Tadawul stock exchange, where its shares are traded.
The joint venture, the Sabic Fujian Petrochemical Company, is 51 per cent owned by Sabic’s wholly owned Sabic Industrial Investments while the rest is controlled by Fujian Petrochemical Company.
The complex, which will be established in the Gulei area of Fujian province, is expected to produce 1.8 million tonnes of ethylene annually and will include state-of-the-art plants for the manufacture of ethylene glycol, polythene, polypropylene and polycarbonate.
The construction is expected to begin during the first half of 2024, while the commissioning and start-up will commence in the second half of 2026 and will last for six months.
“The financial results are expected to be reflected after the commercial production and project completion anticipated to be during the first half of 2027,” Sabic said.
Sabic had signed the initial agreement for the petrochemicals complex in September 2018. The investment decision is part of growing trade and investment relations between Saudi Arabia and China.
In December, Saudi Arabia and China signed agreements worth more than $25 billion to further deepen their economic ties.
At the China-Saudi Investment Conference in Beijing, which was attended by Saudi Minister of Investment Khalid Al Falih, the kingdom signed more than 60 energy, agriculture, tourism, mining, financial services, logistics, infrastructure, technology and healthcare investment deals.
Companies such as Aramco, Sabic, and Acwa Power were among Saudi conglomerates that attended the six-day investment mission and conference.
Mega deals included an $8.5 billion agreement between Saudi E-Sports Federation and VSPO, a Chinese start-up, to promote new opportunities in e-sports.
Riyadh-based conglomerate Ajlan and Bros Holding Group Company signed a $7.5 billion deal with Oriental Energy Company for manufacturing projects.
An energy agreement was also signed by Saudi Arabia's Ministry of Investment and China’s CRRC Group to develop renewable energy and sustainable mobility opportunities worth $2 billion in the kingdom.
China is the largest importer of oil from Saudi Arabia, buying about 1.75 million barrels of oil per day in 2022.
The conference in December follows the 10th Arab-China Business Conference in June and builds on the momentum generated during Chinese President Xi Jinping’s visit to the kingdom in December 2022.
