Abdullah Saif Al Saadoon, CEO of Sipchem, talks to The Energy Year about the company’s investment in new production capacity for petrochemicals and blue ammonia and the forging of international partnerships to harness new technologies. Sipchem is a leading Saudi manufacturer of polymer and petrochemical products.
Can you explain Sipchem’s growth strategy and the company’s principal goals?
Sipchem’s strategy is built on five key pillars: growth, profitability, sustainability, digital innovation and human capital. We aim to double our production capacity from 5 million tonnes per year (tpy) to more than 10 million tpy by 2030, reinforcing our market position and establishing Sipchem as a global leader in the petrochemical sector.
As part of our growth strategy, we have diversified our investments by entering the industrial gas sector, a less cyclical business offering long-term sustainable profitability. Through our joint venture with Linde Gas, a global leader in industrial gases, we earned the trust of the Saudi government by securing a gas allocation for Saudi Arabia’s first blue ammonia manufacturing facility, with a production capacity of 1.2 million tpy.
Additionally, we have strengthened our partnership with LyondellBasell by jointly securing a prestigious feedstock allocation, a cornerstone of our expansion strategy. The world-scale mixed-feed cracker complex will feature a diversified derivative portfolio and will be developed under a 60% Sipchem and 40% LyondellBasell ownership structure. This strategic project marks a significant milestone in our journey toward global leadership and sustainable growth.
Can you share insights on some of your main projects and their alignment with the company’s growth strategy?
We are advancing several strategic projects to enhance our production capabilities and strengthen our market position. Leveraging cost-advantaged feedstocks, world-scale assets and leading technologies, our projects will serve both domestic and global export markets while creating thousands of local job opportunities.
Additionally, we are expanding our EVA [ethylene vinyl acetate] plant in Jubail Industrial City, supported by a USD 187-million contract with South Korea’s SGC. This investment will increase our EVA production capacity and introduce new EVA grades to our portfolio by Q4 2027, allowing us to serve speciality markets better. Furthermore, we are expanding propylene and polypropylene capacity at Al Waha with a USD 169-million investment that will increase annual production by 72,000 tonnes of propylene and 150,000 tonnes of polypropylene by Q4 2026. This expansion will enable us to meet the growing demand from the automotive, textiles and food packaging sectors. All projects are progressing as planned, demonstrating Sipchem’s commitment to achieving strategic growth targets.
How is Sipchem driving innovation and ensuring the successful implementation of its growth strategy?
We firmly believe fostering an innovative culture is essential to sustaining competitiveness and driving a successful growth strategy. To this end, we have developed a comprehensive innovation strategy centred on research and product development, digital transformation and strategic investments in startups and emerging technologies. To ensure the effective implementation of this strategy, we have launched an innovation platform that encourages idea generation and facilitates the seamless execution of innovative initiatives.
At our state-of-the-art innovation centre, we focus on research and product development, providing timely support to our production assets, enhancing our polymer product portfolio and localising new polymer grades in alignment with the Ministry of Industry and Mineral Resources’s strategy. We have recently inaugurated a digital transformation lab to drive profitable growth by integrating AI and IoT applications across our operations. These digital initiatives are designed to enhance process efficiency, optimise decision-making and ultimately increase output at a lower cost.
Our digital strategy is deeply rooted in capability building and empowering local talent while developing in-house use cases. We have established Sipchem InnoVent, a venture capital company based in Switzerland, to accelerate our innovation journey further. Its mission is to invest in startups and breakthrough technologies, primarily focusing on sustainability and digital transformation.
What main elements guided your decision to venture into blue ammonia?
This exciting opportunity started with a partnership with Linde to develop industrial gas projects in Saudi Arabia, with a key focus on decarbonisation and sectors diversified away from the traditional petrochemical industry and its demand cycles.
Our blue ammonia facility will use steam methane reforming with carbon capture and storage technology to produce ammonia with lower carbon emissions, aligning with Saudi Arabia’s sustainability goals and positioning us in the growing markets for low-carbon hydrogen.
Blue ammonia is an energy carrier for blue hydrogen in emerging economies. Our facility will be the first in Saudi Arabia at this scale. The project has received support from the Ministry of Energy, reflecting confidence in our execution capabilities and alignment with national priorities.
How is Sipchem pursuing profitability growth?
Since 2021, we have implemented a consistent and focused strategy to enhance profitability, delivering positive results despite external variables such as feedstock prices and market conditions. Our approach has centred on optimising what we can control – operational performance, fixed costs and market development.
We successfully navigated the post-Covid-19 market recovery, achieving substantial net income and reinforcing our financial stability. As a result, we have significantly reduced our debt-to-equity ratio, which gives us financial flexibility to capture future growth and deliver long-term shareholder value.
We are investing in a diversified product portfolio to drive profitability while enhancing asset reliability and operational efficiency to ensure sustainable performance. Our commitment to sustainability remains a key priority, with a target to reduce carbon dioxide emissions by 15% by 2030, primarily through energy efficiency improvements. As our digital transformation efforts mature, we expect to unlock new profit potential by improving operational, supply chain and marketing efficiencies and optimising costs.
Our key advantage is our diversified product portfolio, which sets us apart in the regional market. We offer specialised chemical and polymer products that no other company in the GCC supplies.
Throughout our short but impactful history, we have built a reputation for building successful partnerships. The decision by Linde, the world’s leading industrial gas company, to choose Sipchem as its exclusive partner in Saudi Arabia to invest in industrial gas opportunities exemplifies this.
Beyond our products, we take immense pride in our investment in human capital, strongly emphasising domestic talent. More than 85% of our workforce are domestic professionals, which adds long-term stability to our business. Guided by a clear purpose, strong principles, a compelling employee value proposition and robust succession programmes, we have positioned Sipchem as a preferred employer for emerging talent and seasoned professionals.
Vision 2030 is bringing about positive changes across Saudi Arabia’s economy, opening opportunities that align well with Sipchem’s strategic direction. We are seeing beneficial developments across multiple sectors, from infrastructure to manufacturing and sustainability. We are excited about the increased demand for our products and the domestic sales that will emerge from Vision 2030. Of course, serving domestic demand is our top priority.
We are actively working to expand our production capacity with unique products, contribute to industrial development and strengthen Saudi Arabia’s position in petrochemicals. Our latest joint project exemplifies this commitment by creating several thousand domestic job opportunities and enhancing Saudi Arabia’s manufacturing capabilities in the petrochemical sector.
Sipchem embraces an open and collaborative approach to partnerships. We highly value all our existing relationships. Our recent collaboration with Linde exemplifies this strategy, as it leverages advanced technology and technical expertise to strengthen our industrial gas sector position. This collaboration underscores our commitment to accessing new technologies through strategic alliances.
Beyond these ventures, we actively explore new opportunities with partners who bring complementary expertise and global market access. Our strong track record of successful collaborations spans Europe, the US, Korea and Japan, reflecting our ability to build mutually beneficial relationships with some of the world’s leading industrial players.
By partnering with best-in-class global leaders in polymers and chemicals, we integrate unique technologies and specialised know-how into our operations, allowing us to leverage global expertise while maintaining a strong competitive edge in the region.
Sipchem serves its global client base through a strategic organisational structure that balances specialised expertise with international market reach. We have established regional entities such as Sipchem Europe and Sipchem Singapore to enhance our global footprint and provide localised support. Their dedicated marketing teams deeply understand their respective markets, allowing us to tailor our approach to regional dynamics, customer preferences and industry trends.
This proactive market presence enables us to maintain strong customer relationships, respond efficiently to evolving needs and optimise commercial activities across different regions. By having a localised presence, we can navigate market fluctuations more effectively, ensuring greater agility and competitiveness in a dynamic global landscape. We are expanding our reach beyond traditional markets to strengthen our market position further. While we continue reinforcing our presence in established regions, we are also exploring new, high-growth markets in Africa and South America.
Combining a strong regional presence, market-driven strategies and a commitment to customer-centric solutions, Sipchem can capitalise on global opportunities, drive sustainable growth and further solidify its reputation as a leading international petrochemical company.
Our people are central to achieving our business objectives. Our recruitment approach focuses on building relationships with local universities to identify promising graduates while selectively adding experienced professionals to bring diverse perspectives. We have also applied a focused approach to develop and support female talent in the workplace as a progressive organisation that values and respects a diversified workforce.
We have created a work environment that promotes engagement and professional development. Three years ago, we implemented competency-based training programmes across all levels to ensure our teams continue developing skills for our evolving business. Given the competitive landscape in Jubail, we have invested in recruitment and development, resulting in an attrition rate below 2%. Talent retention gives us the organisational stability needed to execute our plans effectively.
Sipchem has proactively adapted to global logistics challenges by implementing practical, dynamic solutions to ensure uninterrupted and reliable service to our customers. The recent disruptions in the Red Sea prompted us to establish a staging area in King Abdullah Economic City, allowing us to maintain seamless product deliveries to European and African markets via alternative shipping routes.
Additionally, we strengthened our logistics network by partnering with domestic logistics providers to utilise port export facilities in Jeddah, ensuring efficiency and resilience in our supply chain.
At Sipchem, we take a proactive approach to logistics management, leveraging the expertise of our in-house chartering team to facilitate liquid bulk sales. Our storage infrastructure is another key element of our logistics capability. In Europe, our strategically located storage facilities ensure optimal product availability in high-demand regions, providing seamless coverage across the continent. We collaborate with trusted storage facilities in West Asia, the Far East and Southeast Asia, further enhancing our regional distribution capabilities.
Sustainability is at the core of Sipchem’s business strategy, reflecting our commitment to responsible growth and environmental stewardship. As part of our long-term vision, we have pledged to achieve neutrality in Scope 1 and Scope 2 emissions by 2050, with a near-term goal of reducing our carbon dioxide emissions by 15% by 2030.
Now that we have established our emissions baselines and carbon footprint, we track progress annually to ensure accountability and continuous improvement. In 2024 alone, we reduced carbon dioxide emissions by approximately 70,000 tonnes through targeted process optimisation and operational enhancements.
Beyond emissions reduction, we invest in sustainable innovation through Sipchem InnoVent. One of its initiatives is focusing on industrial water waste treatment technologies to recycle 75% of our industrial wastewater and develop chemical recycling processes to create more sustainable products.
Sustainability is embedded in every aspect of our business, including the design and execution of new projects. All future facilities are being developed with an emphasis on environmental performance, ensuring we minimise our ecological impact while maximising operational efficiency.