State-run oil giant, Sumitomo agree deal for expansion of petrochemical project
Saudi Aramco and Sumitomo Chemical Co have agreed to go ahead with a $7bn expansion of the Rabigh II petrochemical project in the kingdom, the Japanese firm said on Friday, quelling doubts about the future of the delayed project.
The project, which is due to start operations in early 2016, is a key part of Saudi plans to diversify its energy portfolio and boost earnings from downstream activities.
Sumitomo "has confirmed the feasibility of the project and decided to move ahead by finalising various project elements, such as agreement for engineering, procurement and construction and other projects contracts, as well as project financing," the company said in a statement.
State-run oil giant Saudi Aramco and Sumitomo signed an agreement on the plant expansion in 2009. At that time, contracts for the work were due to be announced by 2011.
Under Rabigh II, an existing ethane cracker will be expanded and a new aromatics complex will be built using around 3 million tonnes per year of naphtha to make higher-value petrochemical products, Sumitomo Chemical said.
Aramco and Sumitomo Chemical each hold a 37.5 percent stake in Rabigh Refining & Petrochemical Co, better known as Petro Rabigh, which owns the plants.