Germany's Evonik Eyes Saudi Chemical Investments
January 28, 2009
Evonik is considering investment in Saudi Arabia's chemical industry, which a financial adviser to the German industrial group said could amount to as much as $1.5 billion by 2012.
Evonik signed an agreement last week appointing BMG Financial Group as lead arranger and financial adviser for the potential investment, BMG's chief executive Basil al-Ghalayini told Reuters in Riyadh on Wednesday.
An Evonik spokeswoman in Germany said: "We are considering medium-term possibilities to become active in Saudi Arabia. Concrete preliminary decisions are not on the agenda right now".
Global petrochemical demand has slumped due to the economic slowdown, forcing producers to slash output and lay off staff.
But Evonik wants access to cheap Saudi energy supplies as it prepares for future economic growth and a resurgence in demand, Ghalayini said.
"By the time they commission their plants in 2011 things will be different, by then the cycle will be different and the supply demand ratio will be another one," he said.
Evonik may launch up to three joint-ventures each worth between $400 million and $500 million over the next three years, he said.
Cheap feedstocks make petrochemical companies in Saudi Arabia among the most profitable globally.
BMG is searching for partners for Evonik, Ghalayini said.
State oil giant Saudi Aramco, Saudi Basic Industries Corp (SABIC), and privately owned Saudi International Petrochemicals Co (Sipchem) were potential partners, he said.
"We have not yet approached anybody at this point of time although they (Evonik) have been supplying Aramco and SABIC for many years," Ghalayini said.
Source: AFX News Limited
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