Petrochemicals

Saudi Aramco, which is now a leading integrated energy and chemicals company, is actively pursuing significant investments and partnerships with Chinese petrochemical producers.

In collaboration with Chinese partner Rongsheng Petrochemical Co. Ltd. (Rongsheng), Aramco is exploring the formation of a joint venture in the Saudi Aramco Jubail Refinery Company (SASREF). The move is part of a broader strategy that includes a potential 50% stake acquisition by Rongsheng in SASREF and the development of a liquids-to-chemicals expansion project at the refinery.

Additionally, Aramco is considering acquiring a 50% stake in Rongsheng affiliate Ningbo Zhongjin Petrochemical Co. Ltd. (ZJPC), and participating in its expansion project.

Mohammed Al Qahtani, president of Aramco Downstream, said: “These discussions highlight our ambition to advance our liquids-to-chemicals strategy with strategic partner Rongsheng, both in the Kingdom of Saudi Arabia and China. By building on our existing relationship, we aim to expand in a key geography and attract new investment to the Saudi downstream sector.”

In July 2023, Aramco acquired a 10% interest in Rongsheng through its subsidiary Aramco Overseas Company BV. Rongsheng owns 100% equity in ZJPC, which operates an aromatics production complex and holds an interest in a joint venture producing purified terephthalic acid.

Separately, Aramco is in discussions with Hengli Group Co., a company based in Suzhou, China, about potentially acquiring a 10% stake in Hengli Petrochemical Co., pending due diligence and regulatory clearances. The two companies have signed a memorandum of understanding (MoU) regarding the proposed transaction. This initiative aligns with Aramco’s strategy to expand its downstream presence in high-value markets, advance its liquids-to-chemicals programme, and secure long-term crude oil supply agreements.

Hengli Petrochemical, a subsidiary of Hengli Group, operates a 400,000-barrel-per-day refinery and integrated chemicals complex in Liaoning Province, China, along with several plants and production facilities in Jiangsu and Guangdong Provinces.

Commenting on the MoU, Al Qahtani said: “This MoU supports our efforts to grow our global downstream footprint. We continue to explore new opportunities in important markets as we seek to progress in our liquids-to-chemicals strategy.”

USD 25BN NGL AND OTHER FACILITIES

In June, Aramco also awarded contracts worth more than USD 25 billion to progress its strategic gas expansion, which targets sales gas production growth of more than 60% by 2030, compared to 2021 levels.

The contracts relate to phase two development of the vast Jafurah unconventional gas field, phase three expansion of Aramco’s Master Gas System, new gas rigs, and ongoing capacity maintenance. The company awarded 16 contracts worth a combined total of around USD 12.4 billion, for phase two development at Jafurah. The work will involve construction of gas compression facilities and associated pipelines, expansion of the Jafurah Gas Plant, including construction of gas processing trains, and utilities, sulphur and export facilities.

It will also involve construction of the Company’s new Riyas Natural Gas Liquids (NGL) fractionation facilities in Jubail – including NGL fractionation trains, and utilities, storage and export facilities – to process NGL received from Jafurah.

Fifteen additional lump sum turnkey contracts, collectively valued at approximately USD 8.8 billion, have been awarded to initiate the third phase of expanding the Master Gas System in Saudi Arabia. This project, undertaken in collaboration with the Ministry of Energy, aims to enlarge the network and boost its total capacity by an additional 3.15 billion standard cubic feet per day (bscfd) by 2028. The expansion involves installing roughly 4,000 kilometres of pipelines and 17 new gas compression trains.

DECARBONISATION STRATEGY

Saudi companies are also at the forefront of decarbonising the industry. Earlier this year, SABIC, along with European partners BASF and Linde, inaugurated the world’s first demonstration plant for large-scale electrically heated steam cracking furnaces. After three years of development, engineering, and construction, the demonstration plant is now set to begin regular operations at BASF’s Verbund site in Ludwigshafen, Germany. In March 2021, the three companies signed a joint agreement to develop and demonstrate solutions for electrically heated steam cracking furnaces.

Steam crackers are essential in producing basic chemicals, requiring substantial energy to break down hydrocarbons into olefins and aromatics. The new demonstration plant aims to prove that continuous olefin production is possible with electricity as a heat source. By utilising electricity from renewable sources, this technology has the potential to reduce CO2 emissions from one of the most energy-intensive processes in the chemical industry by at least 90% compared to current methods.