Saudi Aramco Backs $9 Billion Bet With Total on Petrochemicals
(Bloomberg) -- Aramco and Total SA signed an engineering and design contract for a $9 billion petrochemical complex in Saudi Arabia that will convert fossil fuels into building blocks for plastics.
The Amiral complex will be able to produce 2.7 million tons of chemicals annually, according to Amin Nasser, state-run Saudi Aramco’s chief executive officer. The project will be completed by late 2023 or early 2024, said Patrick Pouyanne, CEO of Paris-based Total. Nasser and Pouyanne spoke at a signing ceremony at Aramco’s headquarters in Dhahran. Investment in the project will reach $9 billion, they said, without specifying each company’s share.
Saudi Arabia is seeking to transform its crude-dependent economy by developing new industries, and like other Middle Eastern oil producers, it’s pushing into petrochemicals as a way to earn more from its energy deposits. Petro-states in the Persian Gulf have traditionally shipped crude elsewhere to be refined or turned into chemicals. Saudi Arabian Oil Co., as Aramco is officially known, wants to generate more of that profit at home instead of sending its crude as a raw material to plants in Asia, Europe or the U.S.
“Amiral accelerates our broader downstream strategy of becoming a global leader in refining” and chemicals, Nasser said in a speech at the ceremony. By combining oil refineries with petrochemical plants, Aramco can “increase the conversion of low-cost feedstock into higher-value chemicals,” he said.
The project will include the kingdom’s first mixed-feed cracker, the CEOs said. The $5 billion cracker will use different feedstocks such as natural gas or refined products like naphtha to produce as much as 1.5 million tons a year of chemicals.
Aramco and Total agreed in April to develop the Amiral complex, which includes $4 billion in specialized production facilities. These facilities will involve 11 local and international partners, Aramco said, without identifying them.
Amiral will be located on Saudi Arabia’s Persian Gulf coast at the port of Jubail, where the partners already operate the Saudi Aramco Total Refining and Petrochemical Co., or Satorp, facility. They will also expand Satorp’s refining capacity to 480,000 barrels a day from 440,000 currently, Pouyanne said, without providing a date. The Satorp refinery started operating in 2012 with a capacity of 400,000 barrels a day.
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