Saudi Aramco, the world's largest crude exporter plans to collaborate with South Korea's third largest refiner to develop a $6 billion downstream project, as the kingdom looks abroad for more chemical assets. The memorandum of understanding was signed following the inauguration of a multi-billion dollar refining expansion at S-Oil by Saudi Arabia's Crown Prince Mohammed bin Salman.
The steam cracker and olefin project will be completed by 2024. The scheme will produce ethylene and basic chemicals using naphtha and refinery off-gas as feedstock.
Ethylene is used in the manufacture of polyethylene, which is the world's most widely used plastic.
Saudi Aramco is a major stakeholder in S-Oil, South Korea's third-largest refiner through its subsidiary Aramco Overseas Company. The South Korean firm has a refining capacity of around 700,000 barrels per day. Saudi Aramco, which has looked to build up its downstream assets looks to raise its refining capacity to between 8 and 10 million bpd from around 5 million bpd, while at the same time doubling its chemicals capacity.
S-Oil will incorporate Saudi Aramco's thermal crude to chemicals technology replacing its existing oil-to-chemicals technology in the upcoming project.
The addition of a new residue upgrading complex as well as olefin downstream complex to S-Oil will contribute to the manufacture of high-value products such as propylene and gasoline. The new facilities have also boosted the South Korean company's refining position from 8 per cent to 13 per cent.
"These two new facilities will supply high-value products to major Korean industries, whose global brands are part of our everyday lives and rank among the world’s very best in technology, innovation, creativity, and quality,” Saudi Aramco president and chief executive Amin Nasser said.