Saudi Basic Industries Corporation (Sabic) and the kingdom's oil major Saudi Aramco have signed an initial agreement with Poland's refining company PKN Orlen to explore the potential of joint investments in petrochemical projects in Poland and markets in central and eastern Europe.
The three companies have agreed to study and collaborate on opportunities including a new chemical production unit in Poland and the expansion of several existing assets, Sabic said in a statement on its website on Thursday.
The companies will also study the development of a new cracker — a unit which converts convert crude oil into petrochemical feedstock — in Poland, it said.
If the parties agree to invest in the petrochemical project, they will enter into a separate project joint development agreement, Sabic said.
“By bringing together the scale, expertise and technologies of three world-leading companies, this MoU [memorandum of understanding] enables us to identify and assess opportunities for ambitious and sustainable growth,” Abdulrahman Al-Fageeh, Sabic's executive vice president for petrochemicals, said.
Saudi Arabia's petrochemicals and energy companies are increasingly exploring investment opportunities beyond the kingdom's borders and looking to form joint ventures and partnerships as they seek to expand their operations globally.
Sabic's majority owner Aramco earlier this week completed three transactions with PKN Orlen, Poland's top refiner and fuel retailer. Aramco acquired a 30 per cent stake in PKN Orlen’s 210,000 barrels-per-day refinery in Gdansk, a 100 per cent stake in its associated wholesale business and a 50 per cent stake in a plane fuel marketing joint venture with BP Europa that operates in seven airports in Poland.
Opec's top crude exporter Saudi Aramco, which owns a 70 per cent stake in Sabic, has been investing billions of dollars in downstream projects to extract more value from its crude oil output.
PKN Orlen is Poland’s top energy group and specialises in the manufacturing, distribution, wholesale and retailing of refined petrochemical products. It operates several refineries in Poland, Lithuania and the Czech Republic.
Sabic, the Middle East's biggest petrochemicals producer, last month said it is planning to set up a plant to convert crude oil into petrochemicals, capitalising on growing demand.
The crude-to-chemicals complex in Ras Al Khair, in the east of Saudi Arabia, is expected to convert 400,000 barrels per day of oil into chemicals.
The petrochemicals industry is expected to be a major driver of crude oil demand in the next few decades as consumers increasingly switch to electric vehicles. Globally, the sector is projected to be worth roughly $800 billion by 2030, up from about $475 billion in 2020, according to Precedence Research.
Petrochemicals are set to account for more than 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.