LONDON: Saudi Aramco and SABIC struck an initial agreement to develop a $20 billion industrial complex that will bring 30,000 jobs to the Kingdom.
The pair signed a memorandum of understanding on Sunday for what would be the world’s biggest crude-to-chemicals plant.
It represents the latest move by the country to diversify its industrial base by moving away from crude oil sales towards developing higher value exporting industries.
It also joins the country’s two industrial titans into a partnership that aims to develop pioneering technology.
“This venture will contribute to the realization of one of the major aspirations of Saudi Vision 2030, namely achieving economic prosperity by boosting our investment capacity, diversifying the economy and creating jobs for Saudi nationals,” said SABIC CEO Abdullah Al-Benyan.
“It will help strengthen our economic growth and attract world-class quality investments thanks to our unique and strategic geographic location.”
The complex is expected to process 400,000 barrels of crude oil per day, which will produce approximately 9 million tons of chemicals and base oils annually and is expected to start operations in 2025, Saudi Aramco said in a statement.
SABIC has been a driving force in the industrialization of Saudi Arabia since 1976 when it was established by royal decree. Before then, natural gas was flared off at the wellhead but the creation of the company meant that such gas was captured for the first time and converted into ethylene – a building block chemical from which many different kinds of plastic are derived.
It has also been a key part of Saudization efforts dating back to the 1970s with many of its early executives studying chemical engineering in the US before returning to the Kingdom.
“Once completed, this project will not only be the largest crude oil to chemicals complex in the world, it will also set a new competitive threshold thanks to the project’s mass scale and the benefits derived from our joint collaboration,” added Al-Benyan.
Aramco said the new complex would be designed with an innovative configuration that “achieves crude oil to chemicals conversion that is unprecedented in the industry.”
The MoU follows the signing of heads of agreement in June 2016 between the two companies for a feasibility study for the complex.
Aramco and SABIC expect the project to create an estimated 30,000 direct and indirect jobs and make a 1.5 percent contribution to Saudi GDP by 2030.
Investment will shared equally by both companies.