Saudi Aramco, the world’s largest crude exporter, will build a $7 billion refinery-integrated petrochemical steam cracker in South Korea through its S-Oil unit.
The steam cracker, which will convert crude oil into petrochemical feedstock, is expected to produce up to 3.2 million tonnes of petrochemicals annually and include a facility to produce high-value polymers, Saudi Aramco said on Thursday.
“The global petrochemical landscape is rapidly evolving with demand growth anticipated to accelerate, driven in part by rising consumption from Asia’s emerging economies,” said Aramco’s chief executive Amin Nasser.
The plant, which is expected to be completed by 2026, will represent the first commercial use of Aramco and Lummus Technology’s thermal crude to chemicals technology, which increases chemical yield and reduces operating costs, the company said.
Saudi Arabia and Korea signed 26 investment agreements worth about $30 billion, covering sectors such as energy, industrial and manufacturing, transport, financial services, ICT, chemicals, environment services, food processing and pharmaceuticals sectors.
“As proud as we are of the historic links, we are now shifting our focus to the next six decades of our partnership and beyond," Khalid Al Falih, the Kingdom's investment minister, said in a statement.
"The goal of the Kingdom is to grow and diversify the economy away from oil, and we’re swiftly transitioning from a solely hydrocarbon-based economy to one spearheading fuels and technologies of the future."
The deal coincided with Saudi Crown Prince Mohammed bin Salman’s visit to South Korea.
The Crown Prince held official talks with prime minister Han Duck-soo in Seoul on Thursday, the Saudi Press Agency reported.
During the session, they reviewed the friendly relations between the two countries, prospects for bilateral co-operation and ways to develop and enhance it in various fields, the state news agency said.
Bilateral trade between Saudi Arabia and the Republic of Korea jumped 66 per cent to $7 billion in the third quarter of 2021, compared to the same period a year ago.
In January, Saudi Aramco signed 10 agreements spanning manufacturing, low carbon energy development and finance with South Korean companies.
The newly-announced steam cracker will process by-products from crude processing, including naphtha and off-gas, to produce ethylene — a building block petrochemical used to make thousands of everyday items. The plant is also expected to produce propylene, butadiene and other basic chemicals.
The petrochemicals industry is expected to be a big driver of crude oil demand in the next few decades as consumers increasingly switch to electric vehicles.
Petrochemicals are set to account for over a third of the growth in oil demand to 2030, and nearly half to 2050, ahead of lorries, aviation and shipping, according to the International Energy Agency.
Petrochemicals are also poised to consume an additional 56 billion cubic metres of natural gas by 2030, equivalent to about half of Canada’s total gas consumption today, the agency said.
In March, Saudi Aramco said its joint venture in China would develop a major integrated refinery and petrochemical complex in North East China.
The new greenfield project will have 300,000 barrels per day of refinery capacity and petrochemical units and is expected to commence operations in 2024.
The global petrochemical market is projected to be worth roughly $800 billion by 2030 from about $475 billion in 2020, according to Precedence Research.
“S-Oil’s Shaheen is well positioned to meet rising demand for the materials that will be required across the region’s key industries,” said Mr Nasser.
The plant will use mixed feedstocks, outperforming naphtha-based crackers in terms of overall efficiency and performance, said Aramco.
Aramco is the majority shareholder of S-Oil, holding more than 63 per cent of the company’s shares through another subsidiary.
