Sadara Chemical Co., Dow’s huge joint venture in Saudi Arabia with Saudi Aramco, is putting significant wind in the company’s sails as it prepares to spin out from DowDuPont in the next 18 months.
All 26 units at the Sadara complex achieved commercial operations last year. In the third quarter alone, it sold more than $669 million more than in the same period in 2016. As it ramps up this year, sales will continue to boom. It’s expected to achieve enough sale volume to rank as a Fortune 500 company on its own this year.
Work on the project began in 2011, way before there was any hint that Dow would be forced to remake itself under pressure from activist investors. Annual nameplate capacity of the plants in the complex will be 3 million metric tons of capacity per year. Total investment is $20 billion.
The Sadara polyurethanes business reported strong demand and price increases in downstream higher-margin applications, as well as higher merchant sales of MDI. Last year, polyurethanes grew at about 1.6 times the rate of GDP growth. TDI capacity (200,000 metric tons) at Sadara replaces closed output at Freeport, Texas and elsewhere.
The complex enjoys a significant competitive advantage in both feedstock costs and in allocations of ethane streams.
Feedstock costs were locked down at the beginning of the project and were recently reconfirmed by Saudi Arabia’s Ministry of Petroleum. DowDuPont CEO Edward Breen commented: “All agreements will be honored… I would tell you also the other big thing (is that) we really grabbed the last ethane allocation available, which gives Sadara competitive edge.”
Sadara’s mixed feed cracker started up in August, 2016, cracking ethane gas and naphtha liquid feedstock to produce chemicals for the site’s other facilities. Sadara’s four polyethylene production units came on-line between late 2015 and early 2017.
Thirty-six polyethylene products have been qualified to-date for more than 600 customers in 70 countries. Sadara’s specialty chemicals portfolio includes facilities that manufacture propylene oxide, propylene glycol, ethylene oxide, glycol ethers, amines, isocyanates and polyether polyols.
Dow last year boosted its ownership stake from 35 to 50 percent.
Dow is responsible for marketing Sadara output through its established sales channels. It purchases and sells Sadara products for a marketing fee. The target markets are China, India, Southeast Asia and Central Europe.