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Saudi Companies To Splash Billions On Texas Petrochemical Investments

LNG vessel

Saudi companies are prepared to invest billions in petrochemicals production in Texas, taking advantage of the abundance of cheap natural gas in the Permian and elsewhere in the shale patch, the Houston Chronicle reports.

Aramco, for one, is planning to spend between US$8 and 10 billion on two contracts with oil equipment manufacturers TechnipFMC and Honeywell UPO that may lead to the construction of an Aramco oil equipment manufacturing complex in Texas, Crown Prince Mohammed said during his visit to Houston, which marked the end of his two-week trip across the States.

In its contract with TechnipFMC, Aramco will focus on mixed-feed ethylene production technology, following market trends that suggest plastics and petrochemicals demand will drive oil demand in the future. Ethylene is a key ingredient in the production of an extensive range of plastics.

With Honeywell UPO, Aramco will study the production of benzene—an industrial chemical used in the production of various everyday products, from resins to drugs and pesticides—and paraxylene, a feedstock for the production of polyethylene.

The petrochemicals facility will be part of Aramco’s Port Arthur refinery, operated by subsidiary Motiva. It is the largest refinery in the United States. Last week, its chief executive said the company was considering boosting its 603,000 bpd capacity to between 1 million bpd and 1.5 million bpd.

Related: Is The IEA Biased Towards Fossil Fuels?

In addition to the Aramco deals, Saudi Basic Industries Corp. will build a new headquarters in Katy, to manage its operations in the Western hemisphere. The expansion should be completed within two to three years and will increase the Sabic headcount in Texas to 1,000, Houston Chronicle reports.

Sabic, which is the largest petrochemicals producer in the Middle East, is already working with Exxon on the construction of the largest ethane cracker in the world, worth US$10 billion, in Corpus Christi.

Aramco is also betting big on oil refining and petrochemicals production as it anticipates higher demand for plastics and other oil-derived products to replace demand for fuels as EVs replace internal combustion engine cars in the coming years.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on April 09 2018 said:
    It will be a great misjudgement for Saudi companies to invest in the United States because of risk of litigation.

    On the 29th of March 2018 a US District Judge ruled against Riyadh’s bid to dismiss a series of lawsuits against the Kingdom for its alleged involvement in the 9/11 attacks that killed almost 3,000 people 17 years ago.

    The lawsuits were made possible by a legislative change enabling US citizens to sue Saudi citizens. Now Judge George Daniels says he has found “reasonable basis” in the allegations of the plaintiffs against Saudi Arabia to assert jurisdiction against the Kingdom and give the go-ahead to the cases.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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