SABIC and ExxonMobil choose Saudi site for elastomer JV

SABIC and ExxonMobil Chemical have chosen the Jubail Industrial City as the site for their new elastomers project joint venture, which has moved into the front-end engineering and design (FEED) phase. The project, with an estimated cost of $5 billion, will establish a domestic supply to Saudi Arabia of more than 400,000 tonnes/yr of rubber, carbon black, and thermoplastic specialty polymers, including EPDM/TPE, TPO, butyl, and SBR/PBR, to serve emerging local and international markets in Asia and the Middle East.

The project will also include a vocational training institute and product application development and support center, as part of Saudi Arabia's National Industrial Clusters Development Program to grow and diversify the Kingdom's manufacturing sector.

In 2008, SABIC and ExxonMobil Chemical signed a heads of agreement plan to study ventures in Saudi Arabia at Kemya, the 50:50 ExxonMobil joint venture in Al-Jubail that produces ethylene and polyethylene, and Yanpet, another 50:50 ExxonMobil joint venture, that converts ethane, light naphtha, and LPG into ethylene, PE, and ethylene glycol.

North America, Western Europe, and Asia accounted for 26%, 25%, and 34% of world consumption of ethylene propylene elastomers in 2008, according to SRI Consulting. The largest exporter of EP elastomers, which include EPDM, was the U.S., with China being the greatest importer. Automotive applications account for 45-55% of global EP elastomer demand.

As of March 2009, SRI reports that 13 companies produced EP elastomers from 17 sites around the world. Given demand, and in spite of new capacity additions, the market is expected to remain tight through 2013.