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Dow, Saudi Aramco plan massive plastics plant in Saudi Arabia

The two petrochemical powers will invest about $20 billion in a new joint venture that will include lines for polyurethane, elastomers, linear low-density polyethylene and low-density polyethylene. Called Sadara Chemical Company, the JV will be one of the world's largest integrated chemical facilities, and the largest ever built in one single phase, according to the companies.

Dow Chemical Company is based in Midland, MI, while the Saudi Arabian Oil Company (Saudi Aramco) is headquartered in Dharan. The two companies' new JV will be built in the Jubail Industrial City within Saudi Arabia. According to Dow, planning for the JV reaches back to 2007 (read our May 2007 coverage of the Memorandum of Understanding between the two here).

The new facility will include 26 manufacturing units and flexible hydrocarbon cracking capabilities. The first production units will come on line in the second half of 2015, with all units expected to be up and running in 2016. The companies say the complex will produce more than 3 million tonnes of chemical products and performance plastics annually, with annual sales of products from the complex reaching approximately $10 billion within a few years of operation.

Large petrochemical complexes are not new for the Middle East but in the past few years the governments there (oil is in state hands in the region) also have begun investing upstream to encourage production of, for example, plastic parts using the petroleum-derived materials. That also is the case here as the Dow/Saudi Aramco venture also is likely to include a "Value Park," reported the companies. The two JV partners say companies within the Park could include operations for thermoplastic elastomer compounding, compounding of plastics for wire and cable, specialty packaging processing, a PUR system house, automotive parts production and processing of photovoltaic encapsulant films. Dow is pushing its Enlight brand of polyolefin-based encapsulant films as an alternative to EVA.

Sadara will become an equal joint venture between Saudi Aramco and Dow after an initial public offering. Sadara will have responsibility for product marketing within a local zone of eight countries in the Middle East, and Dow will market and sell on behalf of Sadara to all countries outside of the Middle East zone.

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