Dubai: Saudi Arabia’s two biggest companies signed an initial agreement to build a plant to process crude oil directly into chemicals, a project the partners estimate will have a final value of some $20 billion.
The memorandum of understanding governs the execution of front-end engineering design for the integrated plant, Saudi Aramco and Saudi Basic Industries Corp. said Sunday in a joint statement. The complex, to process 400,000 barrels a day of crude oil when it starts operations in 2025, will help the kingdom diversify its economy away from crude exports, Aramco chief executive officer Amin Nasser said.
“We will take a decision on the final investment value after conducting detailed studies in the second stage, which will take two years," Nasser said in the eastern city of Dhahran at a signing ceremony with Sabic CEO Yousef al Benyan.
Saudi Arabia is prioritizing a more diverse output of petrochemicals to help wean its economy away from crude. Aramco, known formally as Saudi Arabian Oil Co., and Sabic want to produce chemicals that are used in plastics to tap growing consumer-goods markets, particularly in Asia, and to make plastics themselves.
The planned facility will produce about 9 million tonnes of chemicals and base oils annually and is expected to create 30,000 direct and indirect jobs, the companies said. Construction is to start in the fourth quarter of 2019. By 2030, the plant is expected to have a 1.5% impact on Saudi gross domestic product, they said.
“It serves our joint interests and the vision of the kingdom to develop an economy that is not dependent on oil exports," Nasser said.
Sabic is the Middle East’s biggest petrochemicals company, while state-owned Saudi Aramco is the world’s largest oil business. The companies will hold equal investment shares in the plant, according to the statement. Bloomberg