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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.
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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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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.