(Bloomberg) -- Saudi Basic Industries Corp. proposed building a Houston headquarters for its Western Hemisphere operations as the Middle East’s dominant chemical maker seeks to capitalize on the U.S. shale boom.
Sabic, as the company is known, said a final decision will be contingent on receiving local and environmental permits, according to a statement Saturday. The announcement coincided with the final stop by Saudi Crown Price Mohammed Bin Salman on his three-week U.S. tour.
Sabic “has designated the United States as a focus of its future growth plans, capitalizing on the abundance of shale gas,” according to the statement. Bin Salman, the heir to the Saudi throne who has sought to broaden the kingdom’s economy beyond oil, attended the announcement.
Saudi Arabia is increasing chemical production with demand for motor fuels expected to slow amid tightening fuel efficiency standards and the rise of electric vehicles. Fracking and horizontal drilling in shale formations have unleashed torrents of cheap U.S. natural gas that made the country among the most profitable places to produce chemicals, beating the Middle East in attracting projects.
DowDuPont Inc., Exxon Mobil Corp., and Chevron Phillips Chemical Co. are putting the finishing touches on multibillion-dollar factories along the Texas Gulf Coast, part of $188 billion in proposed and recently completed project, according to the American Chemistry Council.
Almost 20 factories are being built or expanded to convert gas liquids such as ethane and propane into ethylene, the most used petrochemical and the main ingredient in polyethylene plastic.
Most of the investment is coming from abroad. South Africa’s Sasol Ltd. is spending $11 billion on a chemical complex outside Lake Charles, Louisiana. France’s Total SA, South Korea’s Lotte Chemical Corp. and Taiwan’s Formosa Plastics Corp. also are investing in U.S. factories.
Sabic has formed a joint venture with Exxon Mobil to build an ethylene plant in Corpus Christi, Texas, with a final investment decision expected this year. The heart of the project features what would be the world’s largest ethane cracker, capable of producing 1.8 million metric tons of ethylene.
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