Aramco, Sabic sign up KBR for $20bn oil-to-chemicals scheme

The planned integrated refining and chemicals project will adjoin the existing 240,000 bpd refinery at Yanbu on the kingdom's west coast

FILE PHOTO: A Saudi Aramco employee sits in the area of its stand at the Middle East Petrotech 2016, an exhibition and conference for the refining and petrochemical industries, in Manama, Bahrain, September 27, 2016. REUTERS/Hamad I Mohammed/File Photo
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Saudi Aramco and Sabic, partners in a planned oil to chemicals project said to be the world’s biggest, have awarded the US engineering firm KBR a project management contract to develop the scheme, the companies said on Thursday.

"With the addition of KBR to the project, Saudi Aramco and Sabic are confident that the right parties are now in place to see the project through its initial phases and the inclusion of a high proportion of local content,” said Aramco chief executive and president Amin Nasser.

Aramco, the world’s largest oil exporter, and Sabic, the Middle East’s biggest chemicals firm, signed an agreement in November to build a $20 billion oil-to-chemicals facility on the country’s western Red Sea Coast. The scheme comes amid plans by Aramco to boost profitability from the sale of products besides crude.


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The planned chemicals complex, which will be integrated with the existing refinery in the industrial city of Yanbu, is set to process 400,000 barrels per day of oil into around 9 million tonnes of chemicals and base oils annually.

KBR will undertake project management and front-end engineering and design. Aramco and Sabic awarded British contracting company Wood Group the scheme’s first management and design contract in March.

The joint developers of the scheme said last year a final investment decision on the project will be taken after the completion of initial studies.

The project, which Aramco has targeted for completion by 2025, is in line with a trend by regional national oil companies to diversify their downstream industry through development of integrated complexes at home and abroad.

Earlier in the month, Saudi Aramco signed an agreement to develop a $44bn integrated refining and petrochemicals complex in western India, its first foray in the large South Asian consuming market. The planned scheme is set to have refining and chemical capacities for 1.2 million barrels of crude and around 18 million tonnes of products annually.

The company also inked a $5bn deal with French oil major Total to develop a huge chemicals complex adjacent to their existing 440,000 bpd refinery in the eastern industrial city of Jubail.

The project will have a mixed-feed steam cracker with 1.5 million tonne capacity to produce ethylene.

Saudi Arabia’s increasing pivot to products from its earlier focus on selling more barrels of oil is also mirrored by the region’s fourth-largest producer UAE, whose state-backed Abu Dhabi National Oil Company is set to announce its downstream strategy in May.