Saudi Arabia's state oil giant Aramco signed on Wednesday a memorandum of understanding with South Korea's refiner S-Oil-majority held by Aramco-to collaborate on a US$6-billion petrochemical project in South Korea as part of the Saudi strategy to boost its downstream and petrochemical presence in overseas markets.
The new steam cracker and olefin project-expected to be completed by 2024-will produce ethylene and other basic chemicals out of naphtha and refinery off-gas.
"This new agreement supports Saudi Aramco's plan to increase its global petrochemicals footprint over the next decade," Saudi Aramco said in a statement on Wednesday.
S-Oil and Saudi Aramco, whose subsidiary Aramco Overseas Company holds 63.41 percent in South Korea's third-largest oil refiner by capacity, also opened on Wednesday S-Oil's new residue upgrading complex and olefin downstream complex as part of the visit of Saudi Crown Prince Mohammed bin Salman to South Korea.
Aramco also signed a total of 12 agreements worth billions of U.S. dollars with South Korean companies, including Hyundai Heavy Industries, Hyundai Oilbank, and Hyundai Motor Group. Aramco and Korea National Oil Corporation signed a deal under which Aramco will explore the potential of crude oil storage in South Korea to complement its marketing and supply activities. With Hyundai Oilbank, Aramco signed crude oil deals for supply of Arabian and non-Arabian crude oil.
While the Kingdom says that it's working on the Vision 2030 strategy to diversify its economy away from oil, the Saudis and their oil firm are increasingly looking to lock in future oil demand in the refining and chemicals businesses in all major markets in the world to open new avenues of sales for their oil and to make sure that Saudi crude will have a market for years to come.
Earlier this year, Saudi Aramco signed an agreement to buy 9 percent in Zhejiang Petrochemical's 800,000-bpd integrated refinery and petrochemical complex in China, and is also looking to boost its exposure and investments on another fast-growing oil demand market, India.
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. More