USA: Chemicals and Oil Refining Saudi Aramco to Expand Chemical Production in the US

Editor: Alexander Stark

Apparently Saudi Aramco is planning to expand its chemical production in the US. According to people familiar with the matter, the company will sign an agreement this weekend with a British oilfield services firm to explore building chemical facilities in Texas.

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Aramco is said to plan a chemical complex project study in US.
Aramco is said to plan a chemical complex project study in US.
(Source: Bloomberg Finance LP)

Dhahran/Saudi Arabia (Bloomberg) — The agreement with Technip FMC supposedly involves a study for a potential chemical unit on the US Gulf Coast that would be able to produce materials used in gasoline and as industrial solvents, said the people, who asked not to be identified because the matter isn’t public. There will also be a study on a facility that can make ethylene, a key compound for making plastics. Saudi Aramco, through its Motiva Enterprises subsidiary, owns North America’s largest refinery, in Port Arthur, Texas.

A second accord with Honeywell International could lead to the construction of a new manufacturing complex in the heart of the US petrochemicals industry. In a separate presentation at a lavish reception for Saudi Crown Prince Mohammed bin Salman in Houston, Motiva said it’s considering doubling the size of its refinery in Port Arthur, Texas. The announcement comes less than a year after Aramco paid $ 2.2 billion to Royal Dutch Shell to gain sole control of the Port Arthur plant and some other Motiva assets the two companies controlled as part of a joint venture. The investment is estimated between $ 8 billion and $ 10 billion, but no formal decision on the chemical projects is expected until 2019, Motiva said in the statement.

Crown Prince Mohammed bin Salman, heir to the throne of the world’s largest oil exporter, is wrapping up a three-week tour of the US to promote his effort to open up the Saudi economy through his “Vision 2030” and has announced several development projects. While in New York in late March, he signed a memorandum of understanding with Softbank Group to build at $ 200 billion solar power development.

Investments in the US were announced as Saudi Arabia’s state oil company plans an initial public offering for as soon as the second half of this year. Proceeds from the share sale should be used to expand the company’s footprint in refining and petrochemicals, rather than in oil exploration and production, Aramco CEO Amin Nasser said in a March 26 Bloomberg television interview in New York.

Nasser also said Aramco is looking at a two- to three-fold expansion of its petrochemicals business from a “huge” global capacity, now that the Sadara joint venture with Dow Chemical is complete. Total SA, the French energy major, and Aramco are due to sign a non-binding agreement on April 10 to develop the petrochemical site at their refinery in Al-Jubail, a person familiar with the matter said April 6.

Technip FMC declined comment. Heather O’Connor, a spokeswoman for Aramco, said by email that the company wasn’t planning any major announcements Saturday.