Saudi Basic Industries Corporation signed a preliminary agreement with the state-controlled Russian Direct Investment Fund and Moscow-based ESN Group for a potential investment in a methanol plant in the Russian Far East, as the Middle East's biggest petrochemicals producer looks to expand its international footprint.
The agreement, part of a broad range of pacts signed during the visit of Russian President Vladimir Putin to Saudi Arabia on Monday, will explore the option to build and operate a methanol plant with a capacity of a 2 million tonnes per annum in Russia's Amur region.
The agreement is in line with the company's efforts to "diversify its operations, seek new investment opportunities and strengthen its position in the global market", Sabic said in a statement to Saudi Tadawul exchange, where its shares trade.
Saudi Aramco, the world's biggest oil producing company, took a 70 per cent stake in Sabic, the kingdom's largest-listed company earlier this year. The Saudi petchems company has sought to significantly increase methanol in its portfolio this year. In January, Sabic signed a preliminary agreement with South Louisiana Methanol to explore the possibility of developing a chemicals plant in the US to profit from the surging North American shale gas production.
It also increased its stake in Arrazi Methanol Company after purchasing Japan Saudi Arabia Methanol Company's 50 per cent interest for $150 million (Dh551m) in December.
Investment in the downstream segment of the energy value chain has become a priority for Middle East oil producers, as they hope to earn revenues from the sale of higher value products.
Russian companies are also exploring investments in the kingdom's lucrative downstream sector.
Russia's Sibur Holding is considering $1 billion worth of investments in the Saudi petchems sector, Mr Putin said ahead of his visit to Riyadh.
Aramco on Monday signed nine preliminary agreements with Russian entities, including a deal with Gazprom Neft to exchange technical knowledge and identify "mutual technical studies of interest to both companies", according to a statement by the state company.
