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SABIC Acquires Shell’s 50 Percent Share from Their Petrochemical Joint Venture, SADAF

Saudi Arabia: Saudi Basic Industries Corp., a Saudi Arabia based manufacturer of petrochemicals, intermediates, industrial polymers, fertilizers, and metals has announced to buy 50 percent stake of Royal Dutch Shell Plc in SADAF, which was joint venture of both the companies. The acquisition deal was valued at USD820 million. SADAF operates six petrochemical plants with a production capacity of 4 million metric tons a year. Shell also acquired BG Group Plc in 2016 and now this deal is sending mixed signals for Shell’s role in Middle East petrochemical market. Shell has also ended its plans for investing USD6.5 billion for a petrochemical plant in Qatar and a natural gas venture in Abu Dhabi. After the acquisition, SABIC has expressed interest in expanding its investments in the U.S shale gas projects.

TechSci Research depicts that the acquisition by Saudi Basic Industries Corp (SABIC) would aid the company in consolidating its share and control in domestic and global petrochemicals market. The acquisition by SABIC is a part of company’s expansion strategy that would also result in leading share in global ethylene market.

According to the recently published report by TechSci Research, “Global Ethylene Market By End Use (Polyethylene (PE), Ethylene Oxide, Ethylene Dichloride (EDC) & Others), By Region (Asia-Pacific, North America, Middle East & Africa, Europe and South America), Competition Forecast and Opportunities, 2011 - 2025”, the global ethylene market is expected to grow at a CAGR of around 11.26% during 2016-2025, on the back of growing demands for flexible packaging materials, disposable items and expanding real estate & construction sector, globally. Increasing awareness among people about package labelling and its advantages, along with production of light weight automobiles and expanding infrastructure sector in developing countries is expected to result in augmented demand for ethylene and its derivatives. Additionally, lifting of sanctions on Iran and its entry to the global market with abundant crude oil reserves and low cost feedstock availability in conjugation with discovery of shale gas reserves in North America, is expected to lead to higher production capacity of ethylene, globally.

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