France's Total is the first international oil major to invest in Saudi Arabia's fuel retail market after signing a deal with oil giant Saudi Aramco to invest US$1 billion over six years in fuel and retail services in the Kingdom.
As Oilprice.com's Cyril Widdershoven said on January 21, the French supermajor and Aramco are setting up a 50/50 joint venture to provide premium fuels in Saudi Arabia. This news was confirmed by Total said on Thursday.
"This joint venture agreement is in line with our global strategy to expand in fast-growing markets worldwide," said Momar Nguer, President Marketing and Services and Executive Committee Member at Total.
The deal also strengthens the Total-Aramco partnership in the Saudi downstream market, Nguer noted.
"The JV will take a phased approach to expanding its network of domestic fuel retail stations, with a plan to reach the goal of owning and operating hundreds of stations by 2021," Saudi Aramco said in its statement.
The Saudi giant and the French group are already partners in several large-scale projects in Saudi Arabia. The two companies are shareholders in the SATORP Refinery and Petrochemical complex which processes around 400,000 bpd of Arabian Heavy Crude Oil.
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In October 2018, Aramco and Total signed a joint development agreement for the front-end engineering and design (FEED) of a giant petrochemical complex in Jubail next to the SATORP refinery. The project will entail investments of around US$5 billion and is planned to start up in 2024.
Saudi Aramco aims to significantly expand its downstream business to capture the oil demand growth in the coming decades, which is expected to come mainly from chemicals and petrochemicals.
"Saudi Aramco will make the most of those prospects with chemicals investments of more than $100 billion over the next 10 years-not including a prospective acquisition. We are expanding this business both in Saudi Arabia and in fast-growing overseas markets like China and India, with the aim of converting two million barrels per day of crude oil into petrochemicals-and we may eventually move our target higher to three million barrels," the company's president and chief executive officer Amin Nasser said in November 2018.
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
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