Bloomberg News

Saudi Petrochemical Makers’ Costs May Rise on Oil, Al Rajhi Says

May 12, 2012

Saudi private petrochemical makers may pay more for their feedstock due to high oil prices, Al Rajhi Capital, the investment arm of the kingdom’s biggest bank by market value, said.

Saudi Arabian Oil Co., also known as Saudi Aramco, is allocating feedstock, mainly propane, to new petrochemical plants at a 27 percent discount to international naphtha prices, Al Rajhi said in an e-mailed report today.

This will make private companies like Sahara Petrochemical Co. (SPC) and Advanced Petrochemical Co. (APPC) more exposed to risks from higher feedstock costs “in case of an up-tick in naphtha prices,” than government-owned companies like Saudi Arabian Fertilizer Co. (SAFCO) that receive most of their feedstock “at a fixed price of 75 cents per million British Thermal Unit,” it said.

To contact the reporter on this story: Wael Mahdi in Khobar at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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