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Saudi Aramco growing its presence in the chemicals market

Hydrocarbon Engineering,

According to IHS, Saudi Aramco is now rapidly leveraging its feedstock cost advantages and a favourable geographical portfolio to become a growing global competitor in chemical production.

The company’s portfolio ranges from oil and gas exploration, development and production, to refining and chemicals. Headquartered in Dhahran, in the kingdom’s eastern province, the company employs more than 57 000 employees in 77 countries.

Similar to the chemicals businesses of other oil and gas majors, Saudi Aramco’s product focus is comparatively narrow. The company produces commodity chemicals and polymers, including olefins and derivatives and aromatics. At present, Saudi Aramco’s chemical business accounts for approximately 10% of the corporation’s revenues and earnings, and is managed by the company.

Sanjay Sharma, vice president, Middle East and India at IHS Chemical commented: “Saudi Aramco’s entry into the petrochemical space is quite recent, since their facilities first started operations in 2007, so their rapid growth in the space is quite remarkable. Saudi Aramco is pursuing a business strategy that identifies advantaged feedstock and optimises the linkages between refinery, gas processing operations, and petrochemicals. This trend of integrating refineries and petrochemicals is common in other regions, but is a more recent trend in the Middle East, which is leading to more aromatics and derivatives production”.

Sharma said that despite their newness to the space, the company has driven continuous improvements in its domestic and international projects, mainly China, South Korea, Japan and the US.

“The integration of Saudi Aramco’s oil and gas production into its refinery and gas processing operations, along with the manufacturing site synergies achieved in the company’s large petrochemical complexes, provide strong competitive advantages for the company. This approach is exemplified by the company’s world scale petrochemicals project called Sadara, which is a US$ 20 billion joint venture between Dow Chemical and Saudi Aramco”, Sharma added. According to IHS, Sadara is scheduled to be onstream in 2016 and will take advantage of the company’s access to low cost, gas based feedstocks and liquid feedstocks.

According to a recent IHS report, Saudi Aramco has a number of other joint ventures, both in the region and elsewhere, including in South Korea, China, Japan, and the US where it holds a 50% share in Motiva Enterprises LLC. Motiva has three US locations – two in Louisiana, and one in Texas.

Saudi Aramco’s strategic projects located mainly in the Middle East and Northeast Asia cover the most demand thirsty markets in the world. Most of the plants, which are co-owned by Saudi Aramco, are new so there are almost no facilities that need to be revamped.

Adapted from a press release by Emma McAleavey.

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