Saudi Petrochemicals - NCBC

FINANCIAL PERFORMANCEFeedstock agreementETHANE AND BUTANE AT A DISCOUNT TO GLOBAL PRICESSaudi Aramco has agreed to supply ethane to Saudi Kayan at a fixed price ofUSD.75/mmBtu for seven years commencing from the first quarter of 2008. Frommid-December 2009, Saudi Kayan started receiving natural gas from Saudi Aramcoto facilitate commissioning of the complex. Industry wide expectations are thatethane prices will be revised to SR1.5/mmBtu in 2012, however we believe SaudiKayan will face this revision in 2015, benefitting from its seven year agreementwith Saudi Aramco.Saudi Aramco has also agreed to supply butane at a price linked to JapaneseNaphtha. The butane prices calculated using this mechanism are lower than butaneexport prices. The price at which butane is supplied to Saudi Kayan is expected tobe revised upward in 2011 from a discount of 31.5% to a discount of 30%. Thecompany should continue to enjoy material cost benefits versus its global peerswho procure butane at market prices.OTHER RAW MATERIALS SUPPLIED THROUGH THE SABIC GROUPSABIC is scheduled to supply methanol to the complex, while the oxygen andnitrogen requirement will be fulfilled by the National Company for Industrial Gases(Gas) – SABIC’s subsidiary. Amine, benzene, butane-1 and soda will also besupplied by SABIC’s subsidiaries.Dividend policiesWe have projected dividend payment of SR1 per share dividend starting from2012e. This results in a dividend yield of 4.5%.27 April 2010 SAUDI KAYAN – INITIATING COVERAGE 55