"We expect an immediate positive contribution to the results of Kemya, Sabic and Exxon Mobil," said Jacobus Van Haasteren, executive vice president of performance chemicals at Sabic at a news conference in Riyadh.

The $3.4 billion project is aimed at both domestic and international synthetic rubber markets as the world's top oil exporter tries to strengthen its downstream industry.

Sabic, 70 per cent state-owned, is the world's largest petrochemical producer by market value. Its chief executive Mohamed Al-Mady said the partners had not yet decided how to finance the plant but all options were open.

"...This is the least of our worry at this time because we are two strong companies and we have many ways to finance it, it will be announced as soon as we are ready for financing," he said at a news conference in Riyadh.

"I expect active markets in the Middle East, Asia and Africa for butyl rubber demand," said Stephen Pryor, president of ExxonMobil Chemical.

"The (global) demand for synthetic rubber products are going much faster than GDP, for example the butyl rubber will grow in 6 per cent range for a number of years, EPDM rubber will grow in a similar fashion," he added.

Saudi Arabia, which is attempting to diversify its economy away from crude oil sales and boost job creation, plans to build downstream industries around its major petrochemicals operations to produce higher value specialty chemicals.

The companies awarded engineering, procurement and construction contracts for the plant, which will produce 400,000 tonnes a year of synthetic rubber and other polymers, in June.

It will be located at the Kemya company, a 50/50 joint venture of Sabic and ExxonMobil Chemical, a unit of ExxonMobil Corp set up in Saudi Arabia in 1979.

Earlier this month Sabic reported a 35-percent drop in quarterly profits to $1.41 billion, its third consecutive quarter of lower net income after recording record earnings in 2011.

Mady said then that he expected to see demand and prices rebound in the second half of 2012. – Reuters