France's oil major Total and Saudi Aramco signed on Tuesday a memorandum of understanding to build a giant petrochemical complex in Jubail, Saudi Arabia, which will see total investments of US$9 billion by the two companies and third-party investors.
The agreement was signed during the official visit of Saudi Crown Prince Mohammed bin Salman to France, following his weeks-long visit to the United States.
Total and Aramco agreed to start front-end engineering and design (FEED) for the petrochemical complex in Saudi Arabia in the third quarter of 2018. The complex will be integrated downstream of the 440,000-bpd SATORP refinery, a joint venture between Saudi Aramco and Total, in order to take advantage of operational synergies.
The petrochemical complex will feature a mixed-feed steam cracker with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units.
The parties will invest around US$5 billion in this project, while another US$4 billion investment by third-party investors will come from other petrochemical and specialty chemical plants that the cracker will feed.
The new petrochemical complex is in line with Saudi Aramco's strategy to expand its chemicals sector capacity, president and CEO Amin H. Nasser said.
"This project illustrates our strategy of maximizing the integration of our large refining and petrochemical platforms and of expanding our petrochemical operations from low-cost feedstock, to take advantage of the fast-growing Asian polymer market," Total's chairman and CEO Patrick Pouyanné noted.
Related: The World's Most Expensive Power Project
Aramco signed today a total of US$12 billion worth of agreements with French companies. The petrochemical project with Total is the major part of those agreements.
Over the weekend, Aramco's wholly owned subsidiary Motiva Enterprises signed in Houston agreements to look into potential petrochemical partnerships in the U.S.-worth between US$8 billion and US$10 billion-with Honeywell UOP and TechnipFMC, in the presence of the Saudi Crown Prince.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More