Saleh Al-Nazha relishes his responsibility as CEO

He reveals his plans for one of Saudi Arabia's largest companies

New CEO, Tasnee, Tasnee Petrochemical Company, Industry Trends

There are some companies whose name evokes a sense of pride from the industry. Saudi Arabia’s Tasnee is one such company. This largely stems from the fact that Dr.Moyadd Qurtas, a well-liked and respected figure in the field of petrochemicals occupied the position of CEO of the company for long.

His knowledge and more importantly wisdom in the field of petrochemicals is almost unparalleled. Beginning this January, Saleh Al –Nazha has taken over this rather lofty position. But Al-Nazha is no stranger to the company, as he has been the senior vice-president of Tasnee since 1999.

Refining and Petrochemicals Middle East spoke to the newly-appointed CEO to find out more about his plans for the company and the year ahead.

“Do you want to know what my first thing to do on the job is... find my way around the company,” he says with a laugh.

“But honestly, I am overwhelmed that I am now in the place of Dr.Moyadd Qurtas. It isn’t like I have not taken some of these decisions or that I am alone, just that I have this big responsibility, which is like a huge load on my back,” he says.

Tasnee is no small company. It is the kingdom’s second-largest industrial company with five business units - petrochemicals, chemicals, metals and metallurgical, diversified, and services.

It is this diversity in portfolio that possibly helped the company weather the storm in 2008–09, when most petrochemical companies took the blow rather badly. This year is extremely crucial for the company, as many of their prized projects will have a start-up during the course of 2013.

“You know the number of projects that are coming online for this year, plus the Butanol project we have just signed the EPC contract for, makes the year very interesting,” he says.

The acrylic acid complex project is a joint-venture with Dow Chemical Company to build a Saudi riyal (SR) 4bn ($1.1bn) acrylic acid and derivatives complex in Al Jubail.

The complex would have three plants - a 145,000 tonne per year (tpy) acrylic acid unit, an 145,000 tpy butyl acrylate plant and an 85,000 tpy glacial acrylic acid plant.

“The acrylic acid project is as planned and will start in March or April 2013. We have actually started the pre-marketing of the products. This is the brochure for the butyl acrylate that will be sold by Tasnee,” he says waving the product leaflet.

Though there are partners in the project, Tasnee has taken on the responsibility for operating the whole project on behalf of the shareholders and also for marketing it locally - in the GCC market.

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The facility would provide the feedstock for super absorbent polymers (SAPs), which are in high demand in Saudi Arabia.

Evonik Industries and Tasnee’s subsidiary Saudi Acrylic Acid Company (SAAC) have also established a joint venture called Saudi Acrylic Polymers Company (SAPCo) for the production of super absorbents.

The facility which has a capacity of 80,000 tpy is scheduled to begin in late 2013. The SAPCo super absorbent production will benefit from the subsidised propylene price from the adjacent cracking facility operated jointly by Tasnee, Sahara, and Lyondell Basell.

“To market the products effectively, Tasnee and Evonik will be forming a marketing company which will be located in Riyadh,” he says.

Tasnee is a company that likes to keep busy, says Al-Nazha, while mentioning about the Butanol project the company has just signed. The Butanol is another mammoth plant which will be operated by the company in the Jubail industrial area.

This will be the first ever butanol plant in the Middle East and the largest in the world. The new plant is scheduled to go on-stream in the first quarter of 2015.

“The butanol project will strongly support the coatings value chain in the Kingdom. Potential investors can build on the normal-butanol and its derivates produced by the new joint venture partners, and introduce a wide range of coating products for the local, regional and global markets,” he says.

Today it is important to understand your customers and see where the commodities you are producing are being used.

Gone are the days, when we did not care where the products were used.
Let me give you an example, he says, when we make polyethylene for pipes, we need to be aware of the technological advancement in the pipe industry.

PE 100 and PE 125 are all new pipe grades and we have to make sure we understand the use of these grades and that the feedstock we supply helps in the utilisation.

To help understand the current trend better, Al-Nazha explains how Tasnee is the first company in Saudi Arabia to produce black resin for pipe grades anticipating demand for such products.

“The Saudi Arabian water network is more than 50 years old with most of it being metal pipes, and we know that the water we are producing is using a lot of energy, but we are losing nearly 30% of the resource through leakages.

These pipes have to be changed sooner rather than later. So, understanding this need, we began producing HDPE pipe resins that are tri-modal PE 100 materials derived by using the ACP (Advanced Cascade Process) technology from our partners Lyondell Basell, such products are of top quality and high performance,” he explains.

Further, when we designed our plant, we did it in such a way that the entire range of high-density polyethylene line can be manufactured – 400,000 tonnes of the entire pipe grade. So, here we anticipated a demand for pipes for the water network and installed our facility almost five years ago.

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I think this is the way forward for commodity producers – do not view your production line as just churning out mass material instead see it as producing the raw material for something very specific, he says.

Well, Tasnee is also not a company shy of making huge capital investments in humongous manufacturing plants.

“You need to plan ahead, plan for the future and build you capacity,” says Al-Nazha.

Al-Nazha is aware that access to cheap feedstock can no longer be the company’s unique advantage. All the companies in Saudi Arabia have access to gas and all of them are diversifying the portfolio to stay in business and do so profitably.

“We, at Tasnee also are very focussed on our plastic research centre, Nepras,” he says.

This is the company’s prized research and development facility which houses laboratories that are equipped with physical and analytical testing, rheological and thermal analysis, molecular characterisation and microscopy studies, films, pipes and containers testing.

Plastic processing machines which comprise; compounding and pipe extrusion lines, injection and blow molding presses and multi layers blown film extrusion line are all in the facility at a scale to produce semi-commercial quantities.

Tasnee also owns Rowad plastic company which produces five verticals of plastics. With this triangular arrangement of research, commodity production and final product usage, Al-Nazha believes there are no loop-holes in the company’s strategies.

“We have covered ourselves in all the directions,” he says. So when there is any new grade produced, the company has an immediate feedback from Rowad and doesn’t have to wait for months for client feedback, thus making the company more efficient.

The company is also the world’s second largest producer of titanium di-oxide through its ownership of Cristal Global.

When asked about the outlook for business for titanium di-oxide, which is a multi-million tonne-per-year global product, manufactured by a relatively small number of specialist producers, Al-Nazha said that several long-term contracts were signed for raw material supplies for the production and these contracts have helped put Tasnee in a distinctly advantageous position.

“Cristal actually has more competition as it does not depend on feedstock advantage. It depends on how efficient you are in running your business. During the crisis, Cristal managed to have favourable contracts signed with raw material suppliers,” he says.

To understand Tasnee, you need to understand we are a small large company, says Al-Nazha.

Small in our way of doing business, our way of making decisions, our way of responding to customers and large in our size and portfolio, he notes saying the company despite its enormous size is not bureaucratic in its ways.

When the discussion moves to building excess petrochemical capacity in Saudi Arabia and possible challenges in off-take, Al-Nazha admits the company was worried about the market for butyl- acrelate from the acrylic acid project.
However, in the pre-marketing drive itself, the commodity was hundred per cent sold out.

“What is very important today is that we are producing materials locally. We are substituting the imports of many products today and making further downstream expansion possible in the kingdom.” Also I don’t think there is need for any kind of major concern with regard to capacity, he says.
Even when the world was shattered by the economic crisis of 2008-09, no one stopped using plastics.

It is now a part of our daily life and as the world population grows, the demand for this will only become stronger, says Al-Nazha.

You will see more product expansion and bigger plants, there is no question of downsizing, the CEO concludes.

In numbers
- $1.1 bln is the capital invested in the acrylic acid project that is JV with DOW
- $516 mn Total estimated cost of the Saudi Butanol Project (the largest of its kind)
- One mln tonnes of ethylene is the capacity of Saudi Ethylene & Polyethylene Co.
- 25% Lyondell Basell hold 25% of the Tasnee JV integrated polyethylene complex which required an investment of $2.5b

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