Joint Sumitomo-Saudi Aramco petrochemical plant to begin working+

TOKYO, March 24 Kyodo - The Japanese petrochemical industry may experience a wave of realignments as a gigantic petrochemical plant, jointly built in Saudi Arabia by Sumitomo Chemical Co. and Saudi Arabian Oil Co., will start operating at the end of March, industry officials said Tuesday.

As Sumitomo Chemical plans to export products from the plant to China and other
large consumers at low prices made possible by the availability of low-cost
materials in the oil-rich kingdom, Japanese rivals are worried about suffering
steep falls in exports, they said.
Sumitomo Chemical and the state-owned oil company of Saudi Arabia, known as
Saudi Aramco, began building the plant in Rabigh, a town on the western coast
of the Middle East country, in March 2006 through their join venture, Rabigh
Refining and Petrochemical Co. which is owned 37.5 percent by the comprehensive
Japanese chemical maker.
Completed at a cost of some $10 billion, the plant is capable of producing 1.3
million tons of ethylene a year and 900,000 tons of propylene, which make it
one of the largest petrochemical plants in the world. The new plant can also
refine crude oil.
Although demand for petrochemical products has weakened in the face of the
global recession, the plant will be ''profitable in the long run,'' said an
executive at Sumitomo Chemical.
Sumitomo Chemical and Saudi Aramco have therefore agreed to expand the plant.
As petrochemical plants have been successively built in the Middle East, the
annual production of ethylene in the region, for example, has increased to an
estimated 20 million tons, compared with Japan's 7.7 million tons.
If the plants in the Middle East boost exports of petrochemical products to
China and other Asian markets at the expense of those in Japan, Japanese
petrochemical companies will have to consider combining or closing their
existing facilities, a move that may eventually lead to a realignment in the
industry, the industry officials said.
==Kyodo