Saudi Basic Industries Corp. has signed a memorandum of understanding with energy giant Saudi Aramco and China Petroleum & Chemical Corp., known as Sinopec, to assess the economic and technical feasibility of developing an integrated petrochemical complex with an existing refinery in Yanbu.
In a statement given to the Saudi Stock Exchange, SABIC noted that this MoU would be valid for 18 months.
The signing of the MoU comes just a few days after China reinforced its relationship with Saudi Arabia during Chinese president Xi Jinping’s visit to the Kingdom.
Jinping noted that China will also expand oil trade with Saudi Arabia and added that his visit will act as a historic milestone for Chinese relations with the energy-rich Middle East.
Apart from the deal with SABIC, Sinopec, in December, also signed a framework agreement with Saudi Aramco to build a Phase II 16 million-ton-a-year refining project and 1.5 million-ton-year ethylene units in Gulei, Fujian.
“These projects represent an opportunity to contribute to a modern, efficient and integrated downstream sector in both China and Saudi Arabia. They also underpin our long-term commitment to remain a reliable supplier of energy and chemicals to Asia’s largest economy,” said Aramco Senior Vice President of Downstream, Mohammed Y. Al Qahtani, in a statement.
Aramco said the announcements support its role as a reliable energy supplier to China as the company seeks to expand its liquids to chemicals capacity to up to 4 million barrels per day by 2030. The statement also added that the collaboration also aligns with Sinopec’s vision to become a world-leading energy and petrochemical corporation, providing quality products and reliable energy.
Sinopec President Yu Baocai, earlier in a statement, said that its cooperation with Saudi Arabian entities is “a new milestone achieved through the existing collaboration that demonstrates mutual trust and recognition of all parties, and strengthens their confidence to jointly cope with the energy transition.”
Earlier in November, SABIC, along with Saudi Aramco signed an initial agreement with Poland’s refining company PKN Orlen to explore the potential of joint investments in petrochemical projects in Poland and other European markets.
Last month, SABIC announced that it intends to set up a plant to convert crude oil into petrochemicals, capitalizing on growing demand.
In a statement given to Tadawul, SABIC noted that the crude-to-chemicals complex located in Ras Al Khair is expected to convert 400,000 barrels per day of oil into chemicals.
Saudi Aramco owns 70 percent stakes in SABIC and has been investing billions of dollars in downstream projects and petrochemical facilities.
Earlier in December, Saudi Aramco partnered with French oil major TotalEnergies to build a petrochemical facility in Saudi Arabia with an estimated investment of around $11 billion.
A joint press release issued by the companies noted that the petrochemical facility named ‘Amiral’ will be owned operated and integrated with the existing SATORP refinery located in Jubail on the eastern coast of the Kingdom.
The construction works in the Jubail petrochemical facility will begin in the first quarter of 2023, and are expected to become operational by 2027. The facility is also expected to create over 7,000 direct and indirect jobs.