Speculation grows over Sabic and Aramco joint venture

28 March 2008
The prospect of Saudi Aramco and Saudi Basic Industries Corporation (Sabic) forming a joint venture to develop an integrated refinery and petrochemicals complex has moved a step closer, after Aramco decided to cancel plans for an upgrade of its Yanbu refinery.

Aramco had planned to boost capacity from the Yanbu domestic oil refinery by 125,000 barrels a day (b/d) in a bid to keep pace with spiralling local demand. International contractors were invited to submit prequalification applications for the work in 2007 (MEED 31:8:07).

While Aramco’s reasons for cancelling the refinery upgrade are unclear, the move has increased speculation that it is considering a partnership with Sabic to integrate the refinery with a new petrochemicals complex.

“The fact that Aramco has put the upgrade on hold is a very strong indicator that it is consid-ering a partnership with Sabic,” says one industry source.

Integration with a petrochemicals facility would require a different configuration than the planned upgrade.

If it goes ahead, the scheme would be the third such project in the kingdom, following the Petro-Rabigh and Ras Tanura complexes, which Aramco is developing with Japan’s Sumitomo Chemical Company and the US’ Dow Chemical Company respectively.

Riyadh is thought to welcome a joint venture of Saudi Arabia’s two largest companies, as it would highlight the kingdom’s ability to develop megaprojects without foreign assistance.

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