Saudi Aramco and SABIC’s agreement to form one of the world’s largest crude oil-to-chemicals complexes will deepen the integration of upstream and, giving a boost to the Kingdom’s plans to diversify the economy, BMI Research said in a note on Tuesday.
Aramco and SABIC this week signed a memorandum of understanding (MoU) to develop the complex, which is expected to process 400,000 barrels per day of crude oil, producing approximately 9 million tons of chemicals and base oils annually.
While a final investment decision will not be made before 2019, the plant could begin operations in 2025 if given the green light.
“The deal fits with Saudi Arabia's Vision 2030 by diversifying the economy away from direct crude sales and towards new higher-value products,” BMI said.
The new facility will provide thousands of job opportunities and further marks the next stage of Saudi Aramco's downstream development, following the start of the SATORP and YASREF facilities.
It also increases the flexibility of feedstock available to SABIC, enabling the company to more effectively manage fluctuations in feedstock prices.
“The proposed complex will target the expanding chemicals market and the diesel market, which is due to strengthen post-2020 as more of the shipping sector switches to the fuel,” the consultancy said.
The project will also enable Saudi Arabia to maximize the value of its crude by leveraging the integrated opportunities of processing more oil domestically to meet growing global demand for oil products, it noted.
SABIC CEO Yousef Al-Benyan yesterday said the second phase of economic and technical studies for the COTC complex is expected to be complete by 2019.
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