THREE leading Saudi petrochemical companies, Sadara Chemical Company, the Saudi Kayan Petrochemical Company and Saudi Acrylic Acid Company (SAAC) recently joined forces to establish Sabuco in the country’s capital city Riyadh.

With an estimated investment of $517 million, the new joint mega–plant in Jubail will be the first ever butanol plant in the Middle East.

Butanol produced at the site shall be marketed to customers in Suadi Arabia’s paints and coatings industry, the joint–venture partners explained. The design capacity of the plant, which is scheduled to go on-stream in 2015, is 330,000 metric tonnes per annum of n-butanol and 11,000 metric tonnes per annum of iso-butanol.

“This is another example of success through teamwork and collaboration. We are pleased to create further downstream economic value in Saudi Arabia from butanol-based products,” states Ziad Al Labban, CEO of Sadara.

Also Kayan’s president Mazyad Al Khaldi agrees that the project will add a new product to the Saudi Kayan portfolio, which will contribute to the development of the local downstream industry.

“We are happy at the success all of us have achieved in arriving at a workable business arrangement. It was only due to the dedicated efforts and teamwork on the part of all the partners in all areas that we have been able to make the project a reality,” he says.

The joint venture will be headed by Saleh Al Nazha, CEO of the National Industrialisation Company Tasnee and chairman of SAAC, the partners decided. Tasnee’s petrochemical complex at all Jubail will also become the location for the planned butanol plant.

It will open new job opportunities of around 200 direct and indirect positions for Saudi citizens in strong support of the kingdom’s efforts to create long-term, value adding jobs for nationals.

During the past decade, Middle Eastern oil producers have ventured further and further into the downstream business. Countries like Saudi Arabia, Qatar, Bahrain or kuwait are becoming important players in petrochemicals and polymers.

The Sabuco project could not only become a major step for Saudi Arabia’s industry but also a crucial portfolio expansion for Sadara. The chemical company, a joint venture of Dow and Saudi Aramco is a union of giants in itself and a clear challenge to established top firms like Germany’s BASF.

At Jubail, Sadara is currently building a fully integrated chemical park, consisting of 26 manufacturing units. This project would upon completion become the biggest process plant that was ever built in a single step.

The complex will possess flexible cracking capabilities and will produce over three million metric tons of high value-added chemical products and performance plastics, Dow says.

The investment in the new butanol plant should be well in line will Sadara’s expansion plans. But also SAAC believes that the project could provide additional integration to its Acrylates Complex, which is the first complex of its kind in the region.

“We greatly appreciate the opportunity to collaborate with Sabic/Saudi Kayan and Sadara and their trust in Tasnee to build and operate the joint butanol plant on behalf of the partners. We can jointly benefit from the economies of scales which will enhance our national petrochemical industries’ competitiveness in the world,” states chairman Al Nazha.

Sabuco has recently awarded South Korea’s Daelim Construction Co a 1.1 billion riyal ($293 million) contract to build the butanol plant, Sabuco shareholders say.

Construction of the plant in Jubail Industrial City will start in January 2014, with completion expected by May 2015.

Sabuco was recently registered by the Saudi Ministry of Commerce and Industry. At its first meeting in Jubail recently, the Sabuco board observed that the new joint venture was a reflection of the strong cooperation between three leading Saudi petrochemical companies and their commitment to create economic value through efficient and effective utilisation of the kingdom’s natural resources.