SABIC Secures Feedstock for 1.8-Mt Methanol Plant in Jubail

Saudi Basic Industries Corporation (SABIC) has taken a significant step toward expanding its methanol production capacity after its subsidiary, Saudi Methanol Company (AR-RAZI), received approval from Saudi Arabia’s Ministry of Energy to allocate feedstock for a proposed 1.8 million tonnes per year methanol plant in Jubail.

The feedstock allocation approval, granted on September 3, 2026, represents an important milestone for the proposed project, although the facility has not yet reached its Final Investment Decision (FID). SABIC disclosed the development to the Saudi Exchange on September 6, stating that further material updates, including the FID, will be announced when appropriate.

The proposed Jubail facility would significantly strengthen SABIC’s position in the global methanol market. With an annual capacity of 1.8 million tonnes, the project could eventually add a substantial volume of methanol to the regional supply pool once construction is completed and commercial operations begin.

The development also supports SABIC’s broader strategy of concentrating on its core businesses and strengthening its operational fundamentals. By expanding its methanol portfolio, the company aims to create additional long-term growth opportunities while supporting Saudi Arabia’s ambition to expand its industrial and petrochemical manufacturing base.

Methanol is an important chemical feedstock used in several downstream applications, including formaldehyde, acetic acid, MTBE and other chemical derivatives. It is also increasingly relevant to emerging energy applications, including methanol-based marine fuels and other lower-carbon pathways.

The project comes at a time when methanol markets remain sensitive to Middle Eastern supply availability and logistics. Industry assessments indicate that disruptions affecting Middle Eastern cargo flows have created uncertainty for Asian methanol buyers, while India and other major importing markets have been diversifying their supply sources.

Current regional pricing also reflects this volatility. Methanol prices in India were reported around USD 505–515/tonne CFR in early September, while China prices were around USD 404–412/tonne CFR.

However, the Jubail project is a long-term supply development rather than an immediate production increase. Until the FID, construction, commissioning and eventual commercial start-up, the announcement is unlikely to materially alter near-term physical methanol availability.

For Saudi Arabia, the project could ultimately strengthen domestic methanol production, support downstream chemical industries and reinforce the Kingdom’s role as a major global chemicals manufacturing hub. The initiative is also aligned with the industrial diversification objectives of Saudi Vision 2030.

Impact on Methanol Product and Prices

The immediate impact on the methanol product market should be limited, because the 1.8-million-tonne-per-year Jubail facility is still at the development stage and has not reached FID. Therefore, no significant additional methanol volumes are expected in the near term. Once operational, however, the plant could materially increase Saudi and Middle Eastern methanol supply, potentially weighing on regional prices if production is exported into Asia. This effect could be particularly relevant for India and China, which are major methanol-importing markets. Current prices remain influenced more strongly by Middle Eastern supply disruptions, freight costs and geopolitical risks.