Saudi Chevron Petrochemical
Company, which holds a 50 percent stake in a $650 million factory
being set up in Jubail, has changed its name to ChevronPhillips Saudi
Arabia following the merger of petrochemical operations worldwide by
international giants Chevron and Phillips.
The Jubail factory,
designed to produce 480,000 tons of benzene, 220,000 tons of
cyclohexane and 370,000 tons of gasoline, will be now owned equally by
ChevronPhilips and Saudi Industrial Venture Capital Group (SIVCG).
SIVCG is a joint
stock company formed by a group of 61 leading Saudi businessmen and
five holding companies. Well-known business families such as Al-Juffali,
Al-Zamil, Al-Jomaih, Al-Rajhi, Al-Suleiman, Al-Quraishi, Kanoo and
Zainal have stakes in the company.
The company is now
holding talks with international and Gulf banks to reschedule
repayment of $275 million toward a $305 million loan it had obtained
five years ago.
Saeed Bajouda, vice
chairman, affirmed that the company’s financial status was sound and
strong. He said the rescheduling move had been taken up due to changes
in global economy since 1999. The company has plans to export its
products to East Asian, Far East and Northwest European countries.
This joint venture
is the largest single private investment in Saudi Arabia’s expanding
petrochemical sector. Chevron’s proprietary Aromax Process
technology will be used to manufacture benzene from a natural gasoline
feedstock supplied by Saudi Aramco. Institut Francais du Petrole has
licensed the technology that will be used to manufacture cyclohexane
from the benzene.
fits very well with our long-term strategic intent to expand our
production of low-cost benzene and other aromatic chemicals through
the international deployment of our Aromax Process technology,” says
John Peppercorn, a top official of the ChevronPhillips group.
The government of
Saudi Arabia considers the petrochemical sector the cornerstone of
industrial development and a way for the Kingdom to lessen its
dependence on oil revenue. “This is a step in the direction that
government policy has been set,” says Anzar Ahmad, vice president of
the Riyadh-based Consulting Center for Finance and Investment.
Sheikh Abdul Aziz
Al Quraishi, chairman of SIVCG, said his group was happy to
participate in the project as it supports the Kingdom’s goals to
increase private sector investment in basic industries, create
employment opportunities for Saudis, and bring new hydrocarbon
processing technology to the Kingdom.
Since the 1980s,
foreign investors have had a stake in the Kingdom’s petrochemical
business but this has been in partnership with the majority state-
controlled conglomerate Saudi Basic Industries Corp. “The deal is
proof that the Saudi petrochemical sector is wide open for private
investors ... the government policy is clear,” a Riyadh-based
Phillips announced the signing of a letter of intent and exclusivity
agreement last year to combine their worldwide chemicals operations
into a 50-50 joint venture with more than $6 billion in assets that
will be a world-scale competitor in the petrochemicals industry.
new company, based in Houston, will combine the olefins, polymers and
aromatics businesses of Chevron and Phillips. “Our two
petrochemicals operations are a great fit,” said Dave O’Reilly,
chairman and CEO of Chevron Corp.