Saudi Arabia's national oil company Saudi Aramco and France's state oil company Total signed a memorandum of understanding in Paris to build a giant petrochemical complex in Jubail, Saudi Arabia, according to the French company on Tuesday.
According to the statement, located next to the SATORP refinery in the same industrial area, the complex will comprise a world-size mixed-feed steam cracker - 50 percent ethane and refinery off-gas - with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units.
The complex will be integrated with the SATORP refinery, a joint venture between Saudi Aramco with a 62.5 percent share and Total with a 37.5 percent interest.
"This world-class refinery, whose capacity increased from 400,000-barrel-per-day at its start-up in 2014 to 440,000-barrel-per-day today, is recognized as being one of the most efficient in the world," the statement read.
The two partners will invest $5 billion in the project and plan to start the front-end engineering and design (FEED) in the third quarter of 2018.
The cracker will feed other petrochemical and specialty chemical plants representing an overall investment of $4 billion by third party investors.
The total investment will be $9 billion with plans to create 8,000 local direct and indirect jobs.
The project will produce more than 2.7 million metric tons of high value chemicals, according to the statement.
"The agreement deepens the exemplary relationship enjoyed by our two companies over many decades. It is one that has evolved from a standard buyer-seller arrangement to one imbued with common interests to further develop and diversify our businesses," Amin H. Nasser, president and CEO of Saudi Aramco was quoted as saying.
"Our joint venture SATORP is a remarkably successful model of industry partnership and we are keen to build on this success to further underpin Saudi Aramco's strategy to expand its capacity in the chemicals sector by 2030," he added.
Patrick Pouyanne, chairman and CEO of Total said the project is part of the company's strategy to maximize the integration of large refining and petrochemical platforms and of expanding petrochemical operations from low-cost feedstock, to take advantage of the fast growing Asian polymer market.
"This project will enable us to strengthen our ties with Saudi Aramco, with whom we successfully operate our biggest and most efficient refinery in the world. Finally, it will contribute to the Vision 2030 of the Kingdom by creating 8,000 jobs and bringing in new high-added-value technologies," he said.
By Huseyin Erdogan