Saudi Aramco and French oil major Total SA plan to build a $5 billion petrochemical complex near their refinery in Jubail to tap growing demand in the Middle East and Asia.
The companies signed a preliminary deal for the construction of a 1.5 million tons a year steam cracker and petrochemicals units, Saudi Arabian Oil Co. and Total said in the joint statement Tuesday.
The cracker will feed other petrochemical and specialty chemicals plants, to be built by other companies for $4 billion.
“Saudi Arabia is a growing market” and “it’s also a place from where you can reach other markets in the Middle East and Asia,” Total Chief Executive Officer Patrick Pouyanne said. “Some French companies have plans to join us,” he said, citing water group Suez and tire-maker Michelin.
The project, to be built by the companies’ Satorp venture, is likely to create 8,000 jobs. It is part of Aramco’s plan to diversify from its core business of producing crude oil to expanding into value-added products as it plans the world’s biggest initial public offering. Aramco and Total will also benefit from some of the cheapest feedstock for the chemical plant.
Aramco last week also signed an agreement with companies TechnipFMC Plc and Honeywell International Inc. to explore expanding chemical production along the U.S. Gulf Coast.
Besides the petrochemicals project, more than a other dozen agreements were signed at the France-Saudi business forum Tuesday. These involved deals for companies such as Suez, Veolia Environnement SA, Saur, Schneider Electric SE, Orange SA, and their Saudi counterparts Aramco, Saudi Basic Industries Corp., PetroRabigh, and Saudi Electricity Co.
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