SAUDI Basic Industries Corp, or 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 percent stake in Osos's US$1 billion Yanbu plant project that would make chemicals including polybutylene terephthalate, or PBT, used to make electronic chips, cars and communications equipment, according to Bloomberg News.
Final contracts would be signed within two months after a feasibility study, Sabic 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 yesterday.
Riyadh-based Sabic announced the end of talks in a statement to the Saudi stock exchange, without saying why it was pulling out of the venture.
State-controlled Sabic in August bought General Electric Co's plastics unit for US$11.6 billion, the biggest buyout by a Gulf company, to expand into United States and Asian markets and make higher-value specialty chemicals. Rival Kuwait Petrochemical Industries Co, similarly benefiting from access to low-cost raw materials, in December agreed to buy half Dow Chemical Co's plastics assets for US$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.
Aker Kvaerner ASA, China Petrochemical Corp, GC Engineering & Construction Corp, Samsung Engineering Co and Hanwha Group are among companies bidding for a US$500 million contract to build the plant's main processing units, MEED said.
Riyadh-based Osos aims to make engineering plastics and sell shares to the public. Sabic has a market value of 476 billion riyals (US$127.08 billion).