Aramco-Dow JV Sadara suspends operations at Jubail

Sadara Chemical Company — the USD 20 bn JV between Saudi Aramco and Dow — pulled the plug on production at its Jubail complex, with no clear timeline yet for when operations could resume, the firm said yesterday in a stock exchange filing.

War-inflicted supply chain snags are to blame, and bringing the plant back online is entirely contingent on “domestic and international factors,” the management said.

Why it matters: The shutdown is a big deal for the petrochemical industry far beyond the Gulf. Sadara’s Jubail facility turns out c. 3 mn tons of plastics and chemicals every year, feeding everything from auto manufacturing to the global packaging industry. Aramco CEO Amin Nasser has long championed the facility as a flagship project essential for squeezing more value out of Saudi oil and gas.

The math for the petrochemicals industry doesn’t look good., according to BloombergNEF estimates.

What’s next? Pundits are warning that we’re likely just at the beginning of this wave. “I think we will see more shutdowns of petrochemical plants in the Middle East for the same reasons stocks will be building down the manufacturing chain,” Joseph McDonnell, oil analyst at Energy Aspects, told Bloomberg.