Saudi Aramco eyes partnerships as it expands refining, petrochems
DHAHRAN, Saudi Arabia (Reuters) - Saudi Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand.
Aramco hopes this will help it dominate supplies in India and Malaysia, two of the world’s fastest-growing oil markets after China, and where growth potential is bigger than in other, more developed regions. Aramco is eyeing three separate refining and petrochemical projects in China, Judaimi said.
“Asia has to have the lion’s share ... We believe markets east of the Suez Canal will continue to grow, including the Middle East as well,” Judaimi said, adding that the United States is “another market we want to grow in”.
In April, Aramco said it was integrating a petrochemicals business into its subsidiary Motiva, the United States’ biggest oil refinery.
Aramco is strengthening its refining role in China, one of its biggest customers. It has a refinery joint venture with Sinopec and Exxon Mobil (XOM.N) and is in talks with CNPC to finalize the purchase of a stake in a 260 Mbpd refinery in Yunnan.
Judaimi said he expects to take a final investment decision on the Yunnan refinery, which is operational, by the end of this year.
“We are in the final stage of negotiations. It’s like building a house - the last touches take much longer.”
Aramco plans to build a 300 Mbpd refinery with China’s Norinco. Judaimi said he expects to finish front-end engineering for the Norinco project by mid-2019, following which the company will take its final investment decision.
Judaimi said Aramco had also started negotiations for a third refinery in China.
“It’s a smart refinery with higher conversion of liquids into chemicals,” he said, declining to give details.
‘LAST MAN STANDING’
Aramco has been integrating its refining with petrochemicals to help the company expand its market share and refined products portfolio.
The company is betting on growing demand for fuel in India and Southeast Asia but also shifting more into petrochemicals in case those consumption forecasts prove too optimistic.
“In the long term, we are thinking of investing more into chemicals,” he said.
“We know the world needs chemicals ... as populations grow they need more plastic,” he added.
One centerpiece of Aramco’s push into chemicals is a project it is building at home with Saudi Basic Industries Corp (SABIC), the world’s fourth-biggest petrochemicals company.
The $20 billion project with SABIC is to build a complex that converts crude oil into chemicals directly, bypassing the refining stage. Judaimi said Aramco would make a final investment decision by the end of 2019.
“This is a very critical program and we are going to do all we can to make it happen,” Judaimi said.
Comments