SABIC has announced plans to merge its two wholly owned subsidiaries Saudi Petrochemical (SADAF) and Arabian Petrochemical (Petrokemya) as part of a strategic transformation plan to enhance the efficiency and competitiveness of its global operations.

All SADAF’s assets, rights, liabilities and obligations will transfer to Petrokemya and the company, which was originally a joint venture with Shell, will cease to exist, subject to the receipt of regulatory approvals.

The merger is expected to be completed during the second half of 2019.

The aim of the merger, said SABIC, is to create a more efficient entity that will increase the optimization of assets and unlock value from the synergies between the two companies’ product streams. SADAF operates a complex in Al Jubail, Saudi Arabia, which comprises six petrochemical plants with a total production capacity of more than 4 million tonnes/year as well as a cogeneration power station.

SABIC completed the purchase of Shell’s 50% stake in SADAF for $820 million in August 2017. The Saudi petrochemicals giant exercised its option in the original agreement that allowed it to renew or end the partnership by the end of 2020. The companies set up the joint venture in 1980.

Located in Jubail, Saudi Arabia, Petrokemya produces a range of chemicals including ethylene, propylene, butene, benzene and butadiene, as well as polymers such as PE, PS, PVC and ABS.