Sustaining record SABIC profit will be tough: CEO

Petrochem giant will invest in India if sees something suitable, says Mohamed Al Mady
Sustaining record SABIC profit will be tough: CEO
oil refinery, oil plant, gas plant, oil and gas refinery, energy, petrochemicals plant
By Reuters
Sun 17 Jul 2011 03:31 PM

Saudi Basic Industries Corp (SABIC), the world's biggest
petrochemical firm by market value, said on Sunday that maintaining
profitability would be a tough challenge after posting record profit in the
latest quarter.

The bellwether Middle East conglomerate, which supplies
chemicals, industrial polymers, fertilisers and metals globally, is in a good
position to grow its own business while making acquisitions when necessary,
said Chief Executive Mohamed Al Mady.

Net profit rose 61 percent in the second quarter to a record
SR8.1bn ($2.16bn) from a year earlier, on the back of 49 billion riyals in
quarterly revenue.

"What keeps me awake at night is keeping the successes
we have," Mady said. "This is about the SR8.1bn... How long can we sustain
this? It is challenging."

Asked whether SABIC was interested in any assets being
divest as a result of the split-up of ConocoPhillips and the divestment of its
refining arm, announced three days ago, Mady declined to say whether it was a
possibility.

"We always look at everything, and match it with
company strategy," he said. "We always evaluate these opportunities,
we are always on the lookout for very important acquisitions and for organic
growth."

Bolstered by robust growth in China, India and the Middle
East, results for the latest quarter came in well above analysts' forecasts,
beating the average for SR7.1bn and the highest estimate of SR7.7bn.

"India is a huge market, the [Indian] government is
thinking of attracting new investments and SABIC is looking at investments in
India -- if there are any good investments in petrochemicals there, products
from refineries," Mady said.

"If there are refineries attached to petrochemical
plants we will be looking at that."

SABIC has an advantage over rivals in terms of profitability
because it pays a government-subsidised 75 cents per million BTU (British
Thermal Unit) for gas feedstock, a fraction of the cost on international markets.

In terms of projects, Mady said a decision would be made
this year on SABIC affiliate Saudi Arabian Fertilizers Co.'s (Safco) proposed 1
million tonne urea factory in Jubail. Production is due to begin in the second
half of 2013.

A plan to build a facility with China's Sinopec, estimated
to cost at least $1bn and to be operating by 2015, is on track, Mady said.

Operations at Saudi Kayan Petrochemicals will start
commercial production in the second half of this year, Mady added, having
originally been slated for the first half.

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