Saudi polyolefins and chemicals producers Saudi International Petrochemical Co (Sipchem) and Sahara Petrochemicals have entered a binding agreement to merge their operations, in a bid to squeeze more out of their closely-situated production complexes at Jubail on the Saudi Gulf coast and improve access to capital markets.

The merged firm’s full name will be Sahara International Petrochemical Company, but Sipchem will be its shortened form. The firms will leap from numbers ten and 11...