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Wed 24 Oct 2007 12:40 PM

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Sabic eyes $2bn China chemical projects

World's largest chemical company in 'discussions' over two projects in country, CEO says.

Saudi Basic Industries (Sabic), the world's largest chemical company by market value, said on Wednesday two chemical projects it is considering in China are worth about $2 billon.

"Discussions are still going on," Sabic Chief Executive Mohamed Al-Mady told reporters at a chemicals exhibition in Dusseldorf, Germany. "When you work in China it takes time," he said. Al-Mady did not immediately give more details.

Talks with China's Shide to develop a $5.2 billion petrochemical project in China's Dalian area have stalled, although Sabic is making progress on a venture with Sinopec, Al-Mady told Reuters on Tuesday.

Sabic has been in talks for three years with Shide to build the complex - including an oil refinery and an ethylene plant - in northeastern Dalian.

A industry source close to the deal told Reuters in China in May that Sabic may invest more than $1 billion in building a one million tonne-per-year naphtha cracker with Sinopec to produce ethylene in the northern city of Tianjin.

Sabic on Tuesday beat forecasts with a fifth straight record profit and said Asian demand would support prices of its chemicals and steel products in 2008 despite slowing US growth.

Sabic may be the most attractive petrochemical company in the world with an earnings yield of more than 8%, compared with 3% two years ago, Japan's Nomura bank said in an October 20 report.

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