Vastavam web: State oil giant Saudi Aramco [IPO-ARMO.SE] and petrochemical producer Saudi Basic Industries Corp (SABIC) signed a preliminary deal on Sunday to build a $20 billion complex to convert crude oil to chemicals.Private investment has slowed in the kingdom in the last few years due to low oil prices and government austerity, so Riyadh wants to develop manufacturing industries, including chemicals.
After signing the memorandum of understanding, Aramco Chief Executive Amin Nasser told reporters a final decision on whether to go ahead with the project would be made by the end of 2019.Aramco, the world’s largest oil company, has been developing its downstream business as the government prepares to sell up to 5 percent of its shares next year in an initial public offering (IPO).
The CEOs of both firms said they were considering locating the complex at the Red Sea port city and industrial centre of Yanbu. But Nasser said there were also other options, with factors such as proximity to markets guiding a decision.Benyan said the project could involve two or three crackers, which are used to break heavy hydrocarbons into petrochemicals. The use of so-called flexi-crackers would enable the firms to break down a range of feeds – oil, gas or naphtha.
The complex would process crude at international prices to make polyethylene, polypropylene, xylene, benzene and other products, Nasser said.The new complex would create an estimated 30,000 jobs directly and indirectly, adding 1.5 percent to Saudi Arabia’s gross domestic product by 2030, the companies said.The venture would help SABIC expand operations in the kingdom and give it more feedstock options, Benyan said.