The Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo) today signed a comprehensive Memorandum of Understanding related to the planned development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh (“Rabigh Project” or “Project”).
Once implemented, the proposed Rabigh Project would be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.2 million tons of olefins, along with large volumes of gasoline and other refined products, would be produced. The cost for the direct Project investment is currently estimated to be U.S.$4.3 billion; however, this estimate is subject to change based on the results of a Joint Feasibility Study that will be undertaken by Saudi Aramco and Sumitomo. In addition, this project is expected to create third-party investment opportunities in the private sector for utilities and other related infrastructure.
For the companies, the Project represents an opportunity for the world’s largest producer of hydrocarbons to partner with an outstanding, world-class petrochemical producer to achieve economies of scale unsurpassed by any other project previously undertaken. For the Kingdom of Saudi Arabia, it presents an opportunity for increased industrialization and a platform for broad downstream conversion industry development in the Kingdom. This Project represents a concrete example of the Kingdom’s strategy of attracting foreign investment to expand its economy and provide increased job opportunities for Saudi nationals. It is also consistent with the objective of creating opportunities for private local investment in service and other related industries.
Sumitomo has identified petrochemicals, particularly polyolefins, as one of its core businesses, and it considers securing a stable supply of feedstock that is competitively priced as necessary for strengthening its medium- and long-term competitiveness. This Project is closely in accord with that strategy and constitutes an important step forward in enhancing the global competitiveness of the company’s petrochemical operations. Although Sumitomo has been operating a large-scale complex in a petroleum-refining center, Singapore, since 1984, this Project is the company’s first attempt to establish a foothold in an oil and gas-producing country, thereby assuring the basic feedstock supply for the Project. The Project will, therefore, open a new stage in Sumitomo’s worldwide business strategy.
For more information on polyolefins, click here.
Posted May 9th, 2004