Industrial giant Sabic has earmarked more than $2 billion to expand its petrochemical segment within the next five years, a senior official with the Saudi firm has confirmed.

'We plan to set up a new petrochemical complex in Yanbu. We are putting together the engineering plans and it would be ready in around 2008,' Sabic's Vice Chairman and Managing Director Mohammed Hamad al-Mady reported in an interview.

He said the new complex would produce glycol and polymers, such as polyethylene and polypropylene.

'Such big projects are normally costly and need investment of not less than $2 billion,' Mady said.

Sabic, 70 per cent owned by the Saudi government, controls and operates 16 complexes with international firms, producing around 40 million tonnes of petrochemicals, fertilisers, steel and plastics. It markets around 70 percent of its production outside Saudi Arabia.
Mady, speaking on the sidelines of a petrochemical exhibition in Bahrain, said Sabic is currently undertaking expansion projects at different complexes to add 7.5 million tonnes to its total capacity in the next two years.

'Another big project is to increase capacity of the flat steel plant at (Saudi Iron and Steel Company) Hadeed to two million tonnes per year from one million now,' Mady said.
'We expect to start receiving bids from international constructors within the next two months.

It will need around three years for completion and will make Hadeed one of the biggest steel plants in the world,' he said, but gave no cost.

He said Sabic approved recently an additional 500,000 metric tonnes per year of iron bars from Hadeed, a Sabic subsidiary, to increase its capacity to three million tonnes in two years.

A rolling line would be added at an estimated value of less than $100 million.
'Demand on flat steel is increasing one year after an other. So Hadeed will carry out this expansion to meet the requirements of the region,' Mady said.

'We usually need to borrow from banks to finance up to 60 per cent of our projects.
This percentage rises in bigger projects, but commercial banks are willing to finance Sabic's projects because of its reputation.'

He said the company plans to set up an ethylene plant in the Netherlands with a capacity of 500,000 tonnes per year.

'The project is still under studies and hasn't been approved yet.' Mady was reported as saying.