Saudi Kayan: 24% over budget before startup, still refinancing debt in 2025

Saudi Kayan was conceived in 2003 by a private-sector developer as a value-added petrochemical city at Jubail, and proved too big for its backers almost immediately: the product slate ran from polyethylene through ethylene oxide derivatives to polycarbonate, and the scheme stalled until SABIC took it up under government pressure to move beyond base chemicals. The joint-stock company was established in June 2007 with SAR 15bn of capital, and construction debt peaked at SAR 34.4bn.

By July 2010 the bill was outrunning the plan: the company said the complex was 24% over budget, with $9.4bn already spent by end-March, and took a $1.2bn NCB loan while seeking more. Commercial production slipped from mid-2011 to late 2011. Alembic Global's Ahmed Hassan called the delays a sign of 'deteriorating economics for mixed feed facilities in Saudi Arabia', estimating Kayan's ethylene costs at $450-500 a tonne against roughly $200 for pure-ethane crackers. The company listed on Tadawul on October 1, 2011 — and posted a FY2011 net loss of SR 190.75m, up 1,613%.

The pattern that followed was cyclical dependence: strong profits in petrochemical upcycles — SAR 2.39bn of net profit on SAR 12.66bn of revenue in 2021 — then structural losses when the cycle turned. In FY2024 revenue fell to SAR 8.73bn, the gross margin turned negative at -7.4%, the net loss reached SAR 2.06bn, and equity shrank to SAR 11.5bn. In March 2025 the company lined up SAR 8.1bn of murabaha facilities to refinance all outstanding debt, pushing maturities out to 2034 from a first deadline of 2027.

$9.4bn spent by March 2010 — 24% over budget; SAR 34.4bn of construction debt; FY2024 net loss of SAR 2.06bn on a negative gross margin

The mixed-feed design traded away Saudi Arabia's core cost advantage to serve value-add policy: an estimated $450-500 a tonne for ethylene against $200 for pure-ethane rivals.

A slate stretching from polyethylene to polycarbonate made the complex hard to finance and slow to complete from day one — it was already troubled at inception in 2003.

The startup slipped before the IPO window closed, so public shareholders bought the listing without the boom-year economics that justified the budget.

A decade later, global overcapacity met a high-cost producer: by FY2024 the complex could not cover its cash costs, let alone its depreciation.

Cheap feedstock is a strategy, not a moat. A design that trades away the cost advantage for policy goals makes money only at cycle peaks — and pays for them in the troughs.

Kayan's construction-era debt of SAR 34.4bn had been worked down to SAR 8.1bn by December 2024, and the March 2025 murabaha refinancing extended maturities to 2034. An October 2025 analysis by Sahm Capital framed the open question as restructuring or riding out the downturn. The company remains listed on the Saudi Exchange, and its long-term case still rests on the two assumptions its designers made in 2003: cheap molecules and a SABIC offtake channel — the first diluted by its own feedstock mix, the second strained by global overcapacity.