Saudi petchem companies discuss merger: Correction

corrects company name in paragraphs 1 and 3

Saudi Arabia's petrochemicals sector could be in line for further consolidation after Saudi Industrial Investment Group (SIIG) revealed it has begun discussions to merge with National Petrochemical Company (Petrochem).

Talks to study the economic feasibility of merging the two companies are at an early stage, SIIG said yesterday in a filing to the Saudi stock exchange, where both firms are listed.

SIIG already controls a 50pc stake in Petrochem. A merger would create a company with around $9.4bn in assets. Petrochem has two subsidiaries, Saudi Polymers and Gulf Polymers Distribution, both of which are 65pc owned by Petrochem. Saudi Polymers can produce up to 1.2mn t/yr of ethylene, and 440,000 t/yr of propylene.

Any deal will be subject to the approval of both sets of shareholders. It would mark the latest in a series of tie-ups in Saudi Arabia's petrochemicals sector. Diversified petrochemicals producer Sipchem merged with major polypropylene (PP) supplier Sahara Petrochemicals last year. And state-controlled oil company Saudi Aramco completed a $70bn acquisition of the government's 70pc stake in petrochemicals firm Sabic in June.

Sabic is a major producer of ethylene, ethylene glycol, aromatics, methanol and polymers. Sabic and Aramco were already collaborating on a crude-to-chemicals plant in Yanbu before the deal closed. The plant is due to be commissioned in 2025-26.

By Adal Mirza