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Saudi Arabia’s Sabic Considering Shale Gas Investments in U.S.

Pubdate:2015-07-30 09:37 Source:yueyue Click:

Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, plans to expand investment in U.S. shale gas projects through joint ventures, according to acting Chief Executive Officer Yousef al Benyan.

Sabic, as the company is known, signed an agreement with Houston, Texas-based Enterprise Products Partners L.P. to get shale gas, al-Benyan said in an interview in Riyadh. The company may use the feedstock in the U.S. or export it to other countries such as the U.K., he said. Sabic has converted crackers at U.K. plants to use shale gas as feedstock to produce olefins and their derivatives more competitively.

“The main areas in the U.S. we are looking to invest in are the northeast and the south as they fit our overall expectations including government support, labor laws and unions,” al-Benyan said. “At this point we are not looking to acquire any U.S. companies.”

Sabic, which in 2007 bought General Electric Co.’s plastics unit for $11.6 billion, said in April it plans to expand in China and the U.S. because it’s difficult for the company to grow in Saudi Arabia due to a shortage of gas. The Marcellus shale formation spread across Pennsylvania, West Virginia and Ohio is America’s biggest natural gas producer, with output rising more than 14-fold since January 2007.

Sabic won’t be directly involved in Saudi Arabia’s shale production, he said. The discovery of shale gas in the country will “open up some opportunities for indirect investments for Sabic,” al-Benyan said.

BASF SE is the largest chemicals manufacturer, based on market capitalization.