We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 17 Nov 2010 12:00 AM

Font Size

- Aa +

Moving East

As opportunities in North America and Europe dry up, the Middle East and Asia are the new focus for ExxonMobil, says Steve Pryor, president of ExxonMobil Chemical.

Moving East
Steve Pryor, president of ExxonMobil Chemical.

Successful petrochemical companies require a marriage of technological know-how and access to cheap and readily available feedstocks. For this reason major technology providers are flocking to the Middle East. RPME met Steve Pryor, president of ExxonMobil Chemical, who discusses the experiences of his company in the region.

ExxonMobil has successful downstream joint ventures in Saudi Arabia with SABIC and in Qatar with Qatar Petroleum. “We have two joint ventures in Saudi Arabia, Yanpet and Kemya, both with SABIC, they produce ethylene and its derivatives,” explains Pryor.

The company has had a regional presence for more than 60 years, as it also invests in the upstream sector in Saudi Arabia, Qatar and the UAE. “We initiated our partnership with SABIC 25 years ago,” says Pryor. “So, we are no stranger to this region, and we discovered the power of partnership with governmental and national companies and companies like us,” he adds.

Though the feedstock cost advantage was the main motive behind the company’s presence in the region, other big factors have strengthened the decision. “All our plants with SABIC are world class facilities in all aspects, such as scale, performance, safety and in every aspect of competitiveness. This is along with the region’s favourable logistics conditions to supply both Europe and the Asia Pacific region, mainly from the Saudi Kingdom, along with very supportive governmental policies as well,” Pryor notes.

Gulf activities

The company’s petrochemical activities in the region are currently focused on Saudi Arabia and Qatar, in the upstream and in the downstream sectors. “We have an excellent partnership with Qatar Petroleum, where we have an LNG project and other oil related projects. Also we are working with QP on the concept of developing a new world class petrochemicals complex including a world class ethane cracker,” reveals the president of ExxonMobil Chemical.

In Saudi Arabia, its elastomers project with SABIC going up for development. “Over the next few months, we will be releasing more of the FEED contracts,” says Pryor. “In the months to come we and our partner will evaluate the economics of these ventures, and therefore we will go for the signature of the venture agreement. The sleeves are rolled up, we are in the project development phase,” he observes.

Speculation in media about the cost of the project is rife, some sources estimated the cost of the project would be at around US$5bn, but the president says such guess work is unfounded. “We haven’t announced the cost or start up,” he says. “But they are significant projects and we are not in a position to talk about the cost. The important thing is that the concept is good and we are busy trying to shape the project to deliver what we are looking for,” he adds.

The elastomers joint venture will have a combined capacity of 400,000 tonnes per year (t/y) and produce carbon black, as well as rubber and thermoplastic specialty polymers such as ethylene propylene diene monomer, thermoplastic olefins, styrene butadiene rubber, polybutadiene rubber as well as butyl rubber. The butyl rubber plant is expected to be based within Kemya’s Al Jubail complex. Other planned units will be located at the partners’ Yanpet facility.

Global presence

The future strategy of ExxonMobil’s Chemical business is based on moving east, to serve the increasing demand from the region. “The footprint is gradually shifting from North America and Europe to Asia, and therefore we are shifting gradually to serve these regions, though we are still remaining strong in mature markets, however, all our new major investments are targeting the East, whether the Middle East which is well advantaged to serve the Asia Pacific and Europe, or in Asia Pacific itself,” says Pryor. “The fastest demand will be in the Asia Pacific, mainly China, which is expected to be the engine of the growth, almost 60% of world growth is anticipated to be in the region,” he reveals.

The company has recently inaugurated a new refinery in China in joint venture with Saudi Aramco and China’s Sinopec.

“The other big piece of the new wave of eastern expansion is Singapore which is best placed to serve the Asia and Pacific.” says Pryor. “So the strategy for this business is to be best in place in every part of our business,” he explains.

With its global presence, Pryor reveals that his company faces many challenges. “The issues we face in the region are really no different to the challenges we face worldwide. In the short term, we have the cost of recession and for the first time since the early 80s, we have weak demand,” Pryor adds. “A drop of demand and a lot of supply will make an even more challenging environment,” he explains.

“We take a long term view of the business which is very positive as it will grow about 2% faster than GDP for the long term,” reveals Pryor. “We see a short term economic challenge but we see a bright long term future.”

Other challenges in the region are the growing barriers to free trade, especially in the target markets. “Our industry has been based on a positive history of trade and open access to the market and that’s been part of the success story of the industry,” Pryor says.

“When I talk about the future of the business, the Middle East will be the main player of export in this business, but anti dumping charges will certainly affect the industry,” he observes.

Coupling technology and innovation is the winning mix for the industry according to the president. “With the new technology comes new products, and I think it’s a big opportunity for regional producers to increasingly produce specialty products that can help consumers save energy and that contribute to suitable performance,” he explains. “In times like this, if you can offer products that help consumers save energy, you will be very successful.”

Arabian Business: why we're going behind a paywall

For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.