Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to re-evaluate their $20 billion crude-oil-to-chemicals project and are now looking at integrating existing facilities instead, in a move to save costs in the face of lower oil prices, according to Reuters.
Saudi Aramco and petrochemical producer SABIC in 2017 signed a preliminary deal to build a $20 billion complex to convert crude oil to chemicals.
Amin Nasser, CEO of Saudi Aramco.
In a statement on Sunday, SABIC said the two companies were now considering the integration of Aramco’s existing refineries in Yanbu with a mixed feed steam cracker and downstream olefin derivative units, Reuters reports.
“SABIC and Saudi Aramco remain committed to continue advancing crude to chemicals technologies through existing development programs with the goal to increase cost efficiency, competitiveness and value creation opportunities for petrochemicals,” the statement said, according to Reuters.
In June 2020, Saudi Aramco announced the successful completion of its share acquisition of a 70% stake in SABIC from the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, for a total purchase price of SAR 259.125 billion (US$ 69.1 billion). The acquisition of the SABIC stake fit with Aramco’s long-term Downstream strategy “to grow its integrated refining and petrochemicals capacity and create value from integration across the hydrocarbon chain.”
The decision to change the project comes as oil companies globally re-assess energy projects to conserve cash, with a collapse in demand caused by the coronavirus pandemic threatening to keep crude prices weak for a long time. This year has seen a 35% slump in oil prices to around $43 a barrel.
According to Bloomberg, Sabic suspended new capital expenditure earlier this year as it lost money in the first and second quarters.
