China has approved the Saudi Basic Industries Corporation (Sabic) and Sinopec joint venture plant, the Saudi petrochemicals company said yesterday, announcing a higher cost estimate and a lower output target.
State-controlled Sabic estimated the cost of the project at $3 billion (Dh11bn), 20 per cent higher than the cost announced in June when the two companies unveiled the expanded petrochemicals project in the Chinese northern region of Tianjin.
The initial plan, which was released in January, estimated the plant's cost at $1.7bn.
The plant would have an annual production capacity of 3.2 million tonnes, 20 per cent lower than the output target announced in June, Sabic said in a statement on the Saudi bourse website.
Construction will be completed in September, Sabic said without giving a launch date. Products will include ethylene, polyethylene, polypropylene, glycol-ethylene and butanediol, it said.
The deal for the project was signed during a 2008 visit by Chinese Vice-President Xi Jinping. Sabic said China's National Development and Reform Commission, the country's top planning body, had approved its partnership with Sinopec.
"China is the world's biggest petrochemical market. Sabic's participation in the Tianjin industrial complex will strengthen its presence in Asia and guarantee its proximity to its local customers," the Sabic statement said.
Sales to Asia accounted for 24 per cent of the total sales of Sabic in 2008, which stood at SR151 billion (Dh147.9bn).
Sabic said a 20 per cent increase in the estimated cost of the Sinopec joint venture was due to the expanded scope of the petrochemicals plant.
"What changed is the scope of the project," Mohamed Al Mady Chief Executive of Sabic told Al Arabiya television after the firm announced that the cost of the project is estimated at $3bn, 20 per cent more than the amount projected in June.
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