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Saudi Aramco will enter more petrochemical projects to boost its downstream business after it signed a preliminary $20-billion joint venture agreement for a crude oil-to-chemicals complex in Saudi Arabia, Aramco’s chief executive CEO Amin Nasser told Reuters in an interview published on Monday.
On Sunday, Aramco and Saudi Arabia’s chemicals company SABIC signed a memorandum of understanding to develop a fully-integrated crude oil to chemicals (COTC) complex in Saudi Arabia, planned to process 400,000 bpd of crude oil. Start-up of operations is expected in 2025 and the complex is expected to produce some 9 million tons of chemicals and base oils per year.
The agreement is for the Front End Engineering Design (FEED) before a final investment decision is made. Investment is expected to be shared equally by both companies, Aramco said.
“It’s a starting point, there will be others in the future as we develop our technologies to shift or turn more barrels of crude into chemicals,” Aramco’s Nasser told Reuters after the signing of the agreement.
Aramco will be looking to expand into petrochemicals because the demand in the sector is twice as much as in the transportation sector, the chief executive of the Saudi oil giant said.
“Currently our crude is primarily or mostly utilized in the transportation sector followed by aviation, shipping and other sectors,” Nasser told Reuters.
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Aramco, however, does not see the need to expand its crude oil production capacity beyond the current 12 million bpd because it has enough spare capacity to accommodate the crude oil-to-chemicals project with SABIC as well as other projects, Nasser told Reuters, when asked if the petrochemicals expansion would mean that the Saudi state oil firm had to raise its production capacity.
Aramco is in talks with Chinese petrochemical producers that are building new plants to supply them with crude, a company vice-president said last week. The talks are part of Saudi Arabia’s efforts to gain more exposure to refining and petrochemicals and to reduce its dependence on crude oil production and sales.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.