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Saudi Aramco and SABIC move forward with plans to develop oil-to-chemicals complex

| By Mary Bailey

Saudi Aramco (Dhahran, Saudi Arabia; www.saudiaramco.com) and Saudi Arabian Basic Industries Corporation (SABIC; Riyadh, Saudi Arabia; www.sabic.com) have signed a memorandum of understanding (MoU) to develop a fully integrated crude oil to chemicals (COTC) complex in the Kingdom of Saudi Arabia, which governs the execution of the Front End Engineering Design (FEED) before a final investment decision is made. The announcement follows the execution of a feasibility study conducted for the development of a COTC complex, which was agreed upon in June 2016.

The COTC complex is expected to process 400,000 barrels per day of crude oil, which will produce approximately 9 million tons of chemicals and base oils annually and is expected to start operations in 2025.

Saudi Aramco President and CEO Amin H. Nasser said, “This project converges the commercial and strategic interests of both Saudi Aramco and SABIC, while reinforcing Saudi Aramco’s efforts to optimize the investment of our petroleum resources. COTC will also help expand our downstream portfolio, reducing our focus on the transportation sector and securing new and promising commercial opportunities.”

SABIC Vice Chairman and CEO Yousef Abdullah Al-Benyan said: “This venture will contribute to the realization of one of the major aspirations of Saudi Vision 2030, namely achieving economic prosperity by boosting our investment capacity, diversifying the economy and creating jobs for Saudi nationals. It will help strengthen our economic growth and attract world-class quality investments thanks to our unique and strategic geographic location.”

Al-Benyan added: “Today is a historic day, marking the complementary nature of the relationship between SABIC and Saudi Aramco because it is the first time the two largest economic entities in Saudi Arabia jointly enter into a strategic partnership to achieve a pioneering and innovative new technology. 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. 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 petrochemicals industry.”

This announcement marks a historic alliance between the two largest Saudi global entities, in addition to solidifying the Kingdom’s position as a global leader in chemicals by substantially increasing production and further maximizing value across the entire hydrocarbons chain through integration. The COTC complex will be constructed based on an innovative configuration that achieves crude oil to chemicals conversion that is unprecedented in the industry.

The complex is expected to create an estimated 30,000 direct and indirect jobs, further stimulating the Kingdom’s economic diversification. By 2030 the COTC complex is expected to have 1.5% impact on the Kingdom’s Gross Domestic Product (GDP), with investments being shared equally by both companies.