Aramco, Sumitomo plan to press on with US$7 billion petrochemical expansion

Japan’s Sumitomo Chemical dismissed doubts over the delayed US$7 billion expansion of a petrochemical project in Saudi Arabia. Sumitomo Chemical and Saudi Aramco plan to pursue the project, which is scheduled to begin operations in early 2016, according to a press statement made by Sumitomo Chemical. Sumitomo said it is confident that the market will pull out of a recent slump and that there will be long-term economic growth in China and a renewed, resilient growth in Europe. As car sales in emerging markets like India exhibit slow growth, the plastics industry has been experiencing slow demand while the cost of raw material on the back of rising oil prices continue to weigh on margins. “The industry is now at a low point, but we are not worried about its long-term prospects,” said Osamu Ishitobi, vice-president of Sumitomo Chemical. Saudi Arabia is currently providing cheap fuel for petrochemical plants where the price of ethane, a raw material used in manufacturing plastic, is lower than international prices. The Rabigh II project will convert an existing ethane cracker into a new aromatics complex which will produce three million tons of naphtha per year to make higher-value petrochemical products. Saudi Aramco and Sumitomo each own a 37.5% stake in Rabigh Refining & Petrochemical (Petro Rabigh). (May 25, 2012)