Thursday, 27 January 2011

SABIC boosts innovation spend

Saudi Arabia's petrochemicals and polymers giant SABIC is looking to move further into downstream products in the Kingdom as access to cheap ethane feedstock wanes. To support the drive, which includes it looking at investments in polyurethanes, polyamide and other new materials, it will be stepping up its spend on inhouse innovation.

al_Ubaid is driving innovation harder at SABIC
Over the next few years, spending on R&D will grow to more than 2% of sales from the 1% level currently budgeted, according to Abdulrahman al-Ubaid, executive vice president of technology and innovation, speaking to a Bloomberg reporter recently. The story notes that SABIC is building large R&D centres in India, China and Saudi Arabia.

SABIC reported sales of Riyal150bn ($40bn) last year, suggesting innovation spend will rise to over $800m shortly. In its latest report the company indicated it spent $140m on technology and innovation in 2009.

To put that spend into proportion, here are the 2009 R&D spend figures for the top chemical companies, as listed in ICIS's Top 100 companies:

Company            Spend, $m         As % of sales
BASF                  2,004                 2.76
Dow Chemical     1,492                  3.32
LyondellBasell        145                  0.47
SABIC                   140                  0.51
Mitsubishi Chem  1,477                  5.44
DuPont                1,378                  5.27
INEOS                    85                   0.34
Bayer                  1,289                  5.92

SABIC has indicated its plans to move downstream several times to me recently, first at the 2010 K plastics show in Dusseldorf, where I interviewed vice president and CEO Mohamed al-Mady, and again at the ICIS/Booz & Company petrochemicals roundtable in Frankfurt, in which SABIC's executive vice president for corporate strategy and planning, Abdulla Bazid took part.

In 2009, in recognition of innovation’s key role in driving rapid growth, boosting market share and enhancing corporate positioning, SABIC created its Technology and Innovation (T&I) unit as a single, unified global organization, fully aligned with its research and development plans. Technology departments were created within strategic business units and all SABIC technology centers were linked via a virtual network.

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