FUTURE PLANS AND INVESTMENT

DRIVING GROWTH

Both organic and inorganic, SABIC is working to build an asset footprint in the US to capitalize on shale gas opportunities, to build its presence in Asia and Europe, and to leverage its strength in Saudi Arabia for growth and Vision 2030. It plans to leverage and reinforce its local infrastructure and capabilities in support of its growth ambitions in China.

To maintain our growth momentum, we are further strengthening our relationships with our customers through our operations in 50 countries. We have established an extensive network of regional offices and operational centers throughout the Americas, Europe, the Middle East, Africa and Asia to support customer needs. We have a strong presence in key regions where demand is strong, with proximity to future growth markets as well. With our strategic geographic position and market-driven focus, we are well positioned to support our customers to grow their business with our differentiated offerings and innovative solutions.

Based on our approach of evaluating various investment opportunities that contribute to achieving our objectives and strategic plans, we do not see it feasible to establish a joint venture with South Louisiana Methanol LP in the US to produce methanol, and to establish a petrochemical complex with the Chinese Shenhua Ningxia Coal Industry Ltd. to convert coal to chemicals in China.

IMPROVING BUSINESS PORTFOLIO

SABIC’s business plans for Specialties reflect its strategic importance. We plan to move it toward a multisector industry profile. Organically, the business will continue to focus on new opportunities in fast-growing and disruptive end-markets.

In a challenging competitive environment, SABIC Europe engages constantly in making business improvements, working closely with major OEMs and specifiers to better exploit technology and drive innovation, in compliance with stringent regulations and sustainability targets. We are playing a leading role in addressing the challenges of climate change, and have developed circular solutions with chemically recycled mixed plastic waste.

In 2019, we signed a share-purchase agreement with SAFCO, under which we will acquire the newly formed SABIC Agri-Nutrients Investment Company in exchange for shares, thus increasing our shareholding in SAFCO to 50.1%. Completion of the transaction is subject to regulatory approvals and SAFCO’s shareholders’ approval at its extraordinary general assembly.

LEVERAGING INNOVATION

Innovation is key to maintain a competitive edge, achieve growth and drive success. We work closely with each business unit and operating function to improve existing processes and products as well as developing new ones, often working closely with our customers to do so.

In addition, as part of our research efforts, we collaborate with other companies, universities and international research centers. This usually involves a joint initiation, funding, supervision and completion of the research, followed by a sharing of intellectual property rights. We are currently working with over 350 partners across the globe and major partnerships are in place in the US, the Netherlands, China, Saudi Arabia and India.

ENERGY-EFFICIENT MANUFACTURING

Our manufacturing affiliates in Saudi Arabia are fully committed to complying with the first cycle targets set by the government-led Saudi Energy Efficiency Program (SEEP). Over the last five years, they have taken several initiatives to meet these targets, which will be measured by the SEEP Audit Committee early 2020.

Despite several challenges and difficulties, our affiliates successfully reduced approximately 80% of the overall gap from targets based on the latest 2018 performance report issued by Saudi Energy Efficiency Center (SEEC), which is driving the program.

We have so far completed more than 170 initiatives and projects with a total investment of SAR 4.6 billion. We have also invested in building our competencies and capabilities by certifying more than 100 engineers through our certified energy expert courses, besides providing awareness sessions to more than 250 frontline staff. As part of the capability building, we have developed smart enablers such as Advanced Simulation tools.

Some of the challenges faced by the affiliates were the continued use of some outdated assets at the plants as well as old technologies that required upgrading to comply with SEEP targets. This required huge investments and game-changing technologies that were unattractive from the business perspective. However, after careful evaluation, the affiliates now have more than six new ongoing mega projects with the potential investment of SAR 3.2 billion, besides the already-spent investment.

The affiliates are also considering similar initiatives to comply with future targets, including investing in breakthrough technology, renewable energy, integrated cogeneration, digitalization, etc.

SABIC is continuing to interact closely with SEEC on potential credits for their consideration toward meeting the first cycle target. If we fall short of the target, we will explore solutions with SEEC to mitigate any possible consequences.

INVESTMENT

SABIC continued to develop and expand its businesses under its ambitious long-term strategy. This includes a number of expansion and development projects, as well as signing of a number of strategic agreements.

The projects are split between Saudi Arabia and Rest of World and classified between growth projects, corporate research, corporate social responsibility, efficiency/debottlenecking/ improvement, sustainability/SEEC, research center, regional hub, training facility and housing.

The following is a summary of the key projects and agreements:

We continue to launch new projects at our global sites. They include signing of a number of strategic agreements to enhance our competitiveness in line with our strategy, especially in the diversification of feedstock sources from traditional ones. Among these projects and agreements are: