RABIGH, Saudi Arabia, Nov 12 (Reuters) Saudi Aramco and Japan's Sumitomo Chemicals are in talks to expand their billion joint venture, Rabigh Refining and Petrochemical Co (PetroRabigh), the venture's chief executive said.
The two firms are in ''serious discussions'' to expand the petrochemical complex, which is expected to start commercial operations in the fourth quarter of 2008, Saad al-Dosari told reporters on Monday on a visit to the plant.
The companies, which are planning to sell shares in the venture to the public next year, are looking to add new product lines to the complex, Dosari said. The outcome will be announced in ''the next few months'', he said.
Sumitomo and state-owned Aramco, the world's largest oil company by output, agreed in 2005 to develop the petrochemical complex through a 50-50 joint venture that would upgrade a refinery at Rabigh on the Red Sea coast.
Dosari did not give details of expansion.
PetroRabigh will sell a 25 percent stake in an initial public offering in January that will be open only to Saudi nationals.
Pricing would be announced in mid-December, Chief Finance Officer Toshiki Natsumura said, adding he expected the sale to be oversubscribed.
Aramco said last year the IPO would take place after operations began in 2008. Sumitomo was against selling shares before production started, scuppering the initial IPO plan in 2006.
''The Saudi government strongly advocated an IPO at this stage,'' Natsumura told Reuters. ''It's unusual to have an IPO while the complex is under construction.'' Aramco officials argued that an early share sale would raise cash and help offset rising project costs. Soaring material and construction prices have more than doubled the project's cost from an initial estimate of .3 billion.
PetroRabigh hopes to sell most of its products in Asia and Europe, Natsumura said. Saudi Basic Industries Corp. (SABIC), the world's largest petrochemical firm by market value, also relies on Asian markets for its exports.
''We will face competition from other suppliers like SABIC but this is not an issue because the market is growing so fast, in China and India,'' Natsumura said.
The new complex will produce 18.4 million tonnes of oil products, 1.3 million tonnes of ethylene and 900,000 tonnes of propylene a year.
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