The SABIC Fujian Petrochemical Complex, an ethylene project between China and Saudi Arabia and located in East China's Fujian province, kicked off construction on Monday. [Photo/VCG]

The SABIC Fujian Petrochemical Complex, an ethylene project between China and Saudi Arabia and located in East China's Fujian province, kicked off construction on Monday, marking a significant milestone in cross-regional cooperation for both sides, said major shareholder SABIC, a Saudi petrochemical giant.

Located in Gulei petrochemical industrial park, one of the seven national petrochemical hubs in China, the complex will be built by SABIC Fujian Petrochemicals Co Ltd, a 51:49 joint venture established in 2022 between SABIC Industrial Investment Co — a subsidiary of SABIC — and Fujian Fuhua Gulei Petrochemical Co Ltd.

With an estimated total investment of 44.8 billion yuan ($6.4 billion), the project is scheduled to commence preparation for commissioning and start-up from the second half of 2026, with an expected annual ethylene capacity of up to 1.8 million metric tons, to meet growing market demand for high-end chemical products, while stimulating downstream investment opportunities, it said.

"The SABIC Fujian Petrochemical Complex is a landmark project in our development in China and a testament to SABIC's ambition to become the world's preferred leader in chemicals," said Abdulrahman Al-Fageeh, CEO of SABIC.

"China, as one of the key major petrochemical markets globally, is also a very crucial and strategic market for SABIC. By leveraging our unique strengths, SABIC will continue to invest in China and collaborate with our local partners to contribute to the country's high-quality sustainable development."

SABIC announced its final investment decision for the project last month.

An analyst said SABIC's investment decision reflects its proactive approach to capitalizing on growth opportunities and strengthening its position in key markets like China.

"The initiation of this project marks a further advancement in cooperation between China and Saudi Arabia in the petrochemical field," said Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute.

Luo said Saudi Arabia, as a major exporter of petroleum, is committed to advancing the integration of the upstream and downstream sectors of the petroleum industry. On the other hand, China, being a major player in the petrochemical industry, is a significant importer of petroleum.

"The collaboration between the two parties in this project is mutually complementary and sets an exemplary precedent for future collaboration between China and petroleum-exporting countries," he said.

In addition to the groundbreaking ceremony, the EPC (engineering, procurement and construction) Contracts and a Project Financing Loan Agreement for the SABIC Fujian Petrochemical Complex were signed on Sunday, said SABIC.