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Abu Dhabi, UAETuesday 18 December 2018

France's Total to build $5bn petrochemicals facility with Aramco in Saudi Arabia 

The complex will be integrated with a joint venture refinery in Jubail

Aramco chief Amin Nasser said its investment in India formed part of its global downstream strategy. Simon Dawson/Bloomberg
Aramco chief Amin Nasser said its investment in India formed part of its global downstream strategy. Simon Dawson/Bloomberg

French oil major Total and Saudi Aramco, the world’s biggest oil producer, plan to develop a petrochemical complex in Saudi Arabia that could attract as much as $9 billion in investments including a $5bn ethylene cracker plant.

The planned project is part of the deals worth more than $12bn signed between Saudi Aramco and several French companies during Saudi-France CEOs forum in Paris.

The joint venture, in which Aramco will have a 62.5 per cent stake, will be integrated with the 440,000-barrel-per-day Satorp refinery in the industrial city of Jubail, which also counts Total and the Saudi oil and gas giant as shareholders, Aramco said in a statement on Tuesday. The agreement was signed during an official visit by Saudi Crown Prince Mohammed bin Salman to France.

The petrochemical complex, which will use ethane and refinery off-gas as feedstock, will have a capacity to produce 1.5 million tonnes per year of ethylene and other products. Front-end engineering and design of the project will commence in the third quarter of 2018.

“The agreement deepens the exemplary relationship enjoyed by our two companies over many decades. It is one that has evolved from a standard buyer-seller arrangement to one imbued with common interests to further develop and diversify our businesses,“ said Amin Nasser, chief executive of Saudi Aramco. “Our joint venture Satorp is a remarkably successful model of industry partnership and we are keen to build on this success to further underpin Saudi Aramco’s strategy to expand its capacity in the chemicals sector by 2030.”

Aramco and other Arabian Gulf state-owned energy companies, including Abu Dhabi National Oil Company are expanding their refining and petrochemical capacities as part of efforts to eke out extra value from each barrel of oil and gas produced.

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Saudi Arabia, the world’s biggest oil exporter, is planning to nearly double its refining capacity from current 5.4 million barrels of oil per day by expanding in the kingdom and abroad, where it has stakes in refineries in China, the United States, Japan and South Korea.

Third party investors are expected to contribute $4bn to projects linked to the ethylene cracker, which will feed other petrochemical and specialty chemical plants. In total, the project will attract $9bn in investments, produce more than 2.7 million metric tonnes of higher value chemicals and create 8,00 local direct and indirect jobs.

“This project illustrates our strategy of maximising 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," said Patrick Pouyanné, chairman and chief executive of Total. “This project will enable us to strengthen our ties with Saudi Aramco, with whom we successfully operate our biggest and most efficient refinery in the world.”

Aramco and Saudi Basic Industries Corporation, the region’s biggest petrochemical producer, are building a $20bn oil-to-chemicals plant, which is expected to yield 9 million metric tonnes of products a year.

Aramco signed this week an agreement worth $8bn to $10bn with Honeywell and Technip to study petchems production technology for use in a chemical plant the company is considering building at the Port Arthur refinery, the biggest oil refinery in the US that is operated by Aramco subsidiary Motiva Enterprises.