Saudi oil and chemical majors Aramco and Sabic have signed an agreement to build one of the world's largest oil-to-chemicals facilities, valued at US$20 billion, as Riyadh continues to diversify its economy away from reliance on crude revenues.
The integrated complex, said to be located on the country's western Red Sea coast, will process around 400,000 barrels per day (bpd) of oil that would be turned into around 9 million tonnes of chemicals and base oils annually. The facility is set to begin operations in 2025, Saudi Aramco said in a statement yesterday.
The refining and chemicals scheme will be integrated with Saudi Arabia’s existing 240,000 bpd refinery at Yanbu on the western coast, and falls in line with a trend in the kingdom towards integrating existing refineries with planned petrochemicals (petchems) facilities.
The project will conclude front-end engineering and design before a final investment decision is made, the firm said.
"Once completed, this project will not only be the largest crude oil to chemicals complex in the world, it will also set a new competitive threshold thanks to the project's mass scale and the benefits derived from our joint collaboration," said Sabic vice chairman and chief executive Yousef Al Benyan.
“The project will, therefore, help achieve the respective growth ambitions of Sabic and Saudi Aramco and further establishes the kingdom as one of the pioneers in the petchems industry,” he
Saudi Arabia is also developing another estimated $20bn petchems facility with American multinational Dow Chemicals through their Sadara venture in the eastern industrial city of Jubail.
The planned project is set to produce around 3 million tonnes annually of products – mostly plastics and specialty chemicals.
The Aramco-Sabic venture is set to contribute to 1.5 per cent of the country’s gross domestic product by 2030 with both firms to equally share planned investments.
The coming together of the region’s largest upstream and downstream giants comes amid the backdrop of Saudi Aramco’s planned listing next year of a 5 per cent stake, a move which may generate up to $100bn.
Sabic, which is 70 per cent owned by the Saudi government, is the largest listed firm in the Middle East and the fourth largest chemicals company in the world.
Producers in the region such as the UAE and Oman have also ramped up efforts at increased downstream integration to monetise crude oil into products and plastics to meet rising demand from South Asia and China.
The UAE state-owned operator Adnoc plans to almost triple its petchems production to 11.4 million tonnes by 2025 from 4.5 million tonnes presently as part of its 2030 strategy.
Oman, who’s economy has been squeezed by the oil price slump, has pushed ahead with investment in refining and petchems through an upcoming 230,000 bpd refinery at its Duqm free zone in the south. Another $6.5bn Liwa Plastics Industries Complex has been targeted for completion