The plan is for the facility to take advantage of the cheap feedstock from Aramco and combine that with DOWs chemical expertise. Also, it will take advantage of cheap labor in Saudia Arabia.
This project was originally discussed in 2007, but eventually delayed due to the financial crisis.
It should be a boon for Engineering & Construction companies such as Flour (FLR) and possibly other like Jacob's Engineering (JEC) and Foster Wheeler (FWLT). FLR already has $1.9B contract for connecting all the utilities for the complex, but all companies in the sector will benefit as the project soaks up industry capacity.
Would imagine that construction equipment companies such as Caterpillar (CAT) and specifically crane makers Manitowoc (MTW) and Terex (TEX) will benefit as demand bounces back in the Middle East.
The project is supposedly going forward already as the site is being prepared for initial construction of a mixed feed cracker.
Considering the implications from the 2007 delay this could further indicate that not only is the recession fears over blown, but global growth demand has now created pent up demand. Will be interesting to follow.
Per DOW PR:
- Today’s event is another major step forward for Sadara, which will be comprised of 26 manufacturing units, several of which constitute “mega projects” in themselves. Once complete, the JV complex will be one of the world’s largest integrated chemical facilities, and the largest ever built in one single phase. Saudi Aramco and Dow announced their respective Board authorizations to form the JV on July 25, 2011.
- Just over 100 kilometers from where Al-Falih and Liveris signed the agreement, bulldozers, graders and rollers are proceeding with site preparations on the world-scale, mixed feed cracker, which will be integrated with Saudi Aramco’s extensive hydrocarbon infrastructure.
- “Sadara is an extraordinary and unique venture that will build upon the strengths of both Dow and Saudi Aramco to deliver the diversified and specialty materials and chemicals needed to drive growth in the entire region and beyond," said Andrew Liveris, Dow’s Chairman and Chief Executive Officer.
- Sadara is expected to deliver annual revenues of approximately $10 billion within a few years of operation while contributing significantly to Saudi Arabia’s industrial diversification. The planned product portfolio will add value chains to the Kingdom’s vast natural resources and complement the existing chemical landscape. Ultimately, the JV will be instrumental in Saudi Arabia’s strategy to become not only a strategic chemicals and plastics producer, but also a hub for future downstream manufacturing.
Disclosure: Long FWLT, MTW, and TEX. Please review the disclaimer page for more details.