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Dubai: Saudi Basic Industries Corp (Sabic), the world's biggest chemicals maker by market value, said it ended talks with Osos Petrochemicals on a new plant after failing to reach an agreement.
Sabic on January 15 told the Saudi bourse it signed a preliminary contract to take a 35 per cent stake in Osos's $1 billion Yanbu plant project that would make chemicals including polybutylene terephthalate, or PBT, used to make electronic chips, cars and communications equipment.
Final contracts would be signed within two months after a feasibility study, it said. Cancellation of the project "is not a problem for Sabic as we already have PBT production" plants, Chief Financial Officer Mutlaq Al Morished said declining to comment further.
Riyadh-based Sabic announced the end of talks in a statement to the Saudi stock exchange today, without saying why it's pulling out of the venture.
Building contracts
State-controlled Sabic in August bought GE's plastics unit for $11.6 billion, the biggest buyout by a Gulf company, as part of a plan to expand into US and Asian markets and make higher-value specialty chemicals. Rival Kuwait Petrochemical Industries in December agreed to buy half Dow Chemical's plastics assets for $9.5 billion.
Sabic's talks with Osos may have broken down over the so-called "offtake" cost of the PBT, the London-based Middle East Economic Digest reported April 11, without saying where it got the information. Aker Kvaerner, China Petrochemical Corp, GC Engineering & Construction Corp, Samsung Engineering and Hanwha Group are among companies bidding for a $500 million contract to build the plant's main processing units, MEED said.
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