Can you give your views on the current situation of the global petrochemical market and the outlook for the future? What is Sabic’s strategy to maintain impressive results as reported in 2003?

Sabic’s realisation of its results were driven by two elements; part of it was growth, the other part, the improved economic environment in the world market. From Sabic’s perspective, we still have a very strong and bullish view of the petchem industry.
We believe, provided that you have the right combination of people, site, vision and technology, you will always be able to extract good value. In the coming two to three years we will see that the world supply-demand situation, and the change in global economic environment will enable Sabic to continue to leverage its position in Saudi Arabia and Europe.
In addition, Sabic’s expansion plan continues. If you look at Sabic total production volume of about 40 million tonnes, that by itself is a remarkable figure. We will continue to grow, so that year-on-year, we are able to squeeze between 2-5 per cent capacity increases from the same assets.

Can Sabic’s plans to expand cracker and polymer capacity next year be viewed as a clear commitment to continue to use naphtha as the feedstock in Europe?
Most European producers are basically either on naphtha or on a differentiated selective approach. I think in the long term, Europe will continue to be driven around this because of the availability of these feedstocks to the local producers.
Also, if you look throughout Europe, you will not see a lot of cracker investments. Looking at other feeds, people are looking seriously to Methanol-To-Olefins technology. From a Sabic perspective, it’s also an opportunity because we are a major producer of methanol. However, in the mid-term, within Europe, I do not see a significant shift (to MTO).

Sabic and Mitsubishi Gas Chem have announced a methanol joint venture. Could this (MTO route) be the way forward in Asia, or Saudi Arabia?
I doubt it from a Saudi Arabian perspective that we would invest further in the MTO route. It would be very difficult to justify a project of that nature. For Saudi Arabia, if you are going to extract ethylene, your best choice is ethane. Looking towards Asia, the only way that it would be successful is if you could secure a huge volume of methanol, with a strong logistic back up.
To avoid the logistical challenges of moving such a huge methanol volume, the MTO plant would have to be close to a methanol plant. And that would be a big challenge.

With regard to polymers, will Sabic expand into newer, or a wider variety of grades (following new production capacities coming online in Saudi Arabia), or will products be more homogeneous, as petchem increasingly become commoditised?
When Sabic stepped into Europe and acquired DSM’s petchem business, they introduced news grades (that Sabic did not have). They introduced low density polyethylene with a variety of applications. They also introduced the copolymer (grade of polypropylene), as well as bimodal and various pipe grade applications.
We are already considering, based on the knowledge gained through this acquisition, to introduce similar or some of these grades in our production bases in Saudi Arabia. We will maintain and strengthen the areas that we are in and grow by introducing new grades.

And with regards to your expansion plans in Europe?
It is not a secret that we are striving to realise growth at a rate of between 7-10 per cent per year. And that growth strategy will continue in Europe. We always like to be seen to be at the sunrise in this business. Therefore we will continue to grow. In Europe, the strategy and focus of the European assets remains the polyolefins.
If we look at our chemicals, we continue to see our strength base in Saudi Arabia. The growth in a variety of business that we bring into Europe for the foreseeable future will still be driven through growth in the Middle East.

How does Sabic deal simultaneously in protecting its local interest in the region from imports of goods, as well as exporting goods from Saudi for price advantage?
The most important thing that guides us is that we dedicate mostly the European assets to specific grades that our Saudi assets are not competing with. For logistical reasons, Saudi products are brought into some parts of Europe. By managing locations, as well as differentiating between grades, we are able to grow our production base without creating that confusion.

How willing would Sabic be to buy rival’s divested assets? What is the future of petchem ownership following recent announcements by a number of your competitors to spin-off their petchem assets?
The current wave of restructuring in Europe is unfinished business as far as I am concerned. We have seen a very strong wave (of restructuring) in the 90’s, specifically the late 90’s. For 2001, there was a lack of activity as a result of market depression. But now, we are seeing certain players opting out (of the petrochemical business), because of their shift in business focus, or because their core business lay somewhere else. Sabic has always projected and accepted that these restructuring activities would continue.
Sabic will always look at the opportunity but will not go into any acquisition to try to fix something that will require a lot of management attention. To acquire further businesses is an interesting development that Sabic is watching. We cannot let any opportunity go by without really looking critically at it. But before making any decision, Sabic has to make sure that no acquisition whatsoever will undermine its root base for growth, or its base of strength. Sabic knows what makes Sabic competitive.

Can you update the progress on plans to expand the cracker, petchem plants at Geleen, the Netherlands?
We are currently fully engaged in developing the conceptual engineering for these projects, as we need to firmly define our scope so that we can understand the various things supporting them. As we go deeper into these projects, we see the opportunities continue to be more favourable for Sabic.
I would like to inform you that, yes we have made a decision and we are going ahead to allow additional expenditure to perform conceptual engineering, to confirm estimates, and hopefully after these, to go into basic engineering. We have not yet made a decision to invest the $1.3 billion for the cracker expansion. I can say that a firm decision can only be realised towards the end of next year.

How do you view petchem companies from the Central and Eastern European regions? Is Sabic interested in acquiring assets here?
We are keenly interested in developing relations with the companies in the CEE and finding opportunities, but not really by going to acquire them or buy their assets. But actually going into developing the market in co-operation with these companies.
We are studying on how we can bring our products there but currently we are not in any dialogue for any sort of investments in these areas. As a matter of fact, its a Sabic policy that you have to know the market first, establish a position, before you go ahead in making an investment.

How is the development of people folded into Sabic’s strategy?
In Sabic, one of our core assets is our people. Another is capital, and the third, is what we have on the ground (assets). ‘People’ has always been a central focus for Sabic. As you know, Sabic grew in Saudi Arabia when Saudi Arabia decided to go from a purely oil producing country to become an industrialised economy. So we have the challenge to develop people and we have been successful.