News

Aramco and SABIC Explore Global Projects

28.01.2022 - Saudi Aramco has set its sights on becoming a global player in a number of petrochemical and energy fields. As one of its biggest projects, the world-leading oil producer recently announced plans to invest in the Polish chemicals sector. Together with its 70% subsidiary SABIC, it signed a Memorandum of Understanding (MoU) with Plock-based PKN Orlen to explore possibilities for cooperation.

The plans for Poland mark the Kingdom’s first foray into the international petchems sector since the collapse of a 2019 agreement for Aramco to take a 20% stake worth $1.5 billion in Reliance’s oil-to-chemicals business. After a portfolio review, the Indian group opted instead to sink its money into renewables.

One of the proposed Polish collaborations would involve joint R&D, while a second calls for Aramco to take a 30% equity stake in a 210,000 bbl/d refinery operated by Orlen at Gdansk. Aramco has also agreed to acquire all of an unspecified wholesale business and take a 50% share in a jet fuel marketing joint venture the Polish group has with UK energy group BP. The plans dovetail with Orlen’s desire to diversify its energy base, in particular by importing more crude oil.

Details of the preliminary agreement have not been disclosed; however, Abdulrahman Al-Fageeh, SABIC’s executive vice president Petrochemicals, said that bringing together the scale, expertise and technologies of the three companies would enable the Saudi players to identify and assess opportunities for “ambitious and sustainable growth.”

As a first step in the Polish partnership, the companies will look toward expanding the Saudis’ position in central and eastern Europe, including construction of a new chemical plant and a cracker. If any of the explored projects appear feasible, the partners intend to sign a separate joint development agreement with Orlen, which also operates refineries in Lithuania and the Czech Republic.

All of the financial arrangements are contingent on Orlen completing its proposed merger with Gdansk-based Grupa Lotos as well as receiving approvals for the projects from regulatory authorities, including the European Commission.

Technology and finance MoUs with South Korea

At the Saudi-Korean Investment Forum held in Riyadh in mid-January, an event hosted by Saudi Arabia’s Ministry of Investment, Aramco also signed a number of MoUs with companies based in the Asian Republic.

In addition to focusing on cutting-edge development in a range of fields, Amin H. Nasser, Aramco’s president and CEO, said the agreements also support the prospective partners’ shared goal of finding climate solutions and lowering greenhouse gas emissions through the development of low-carbon hydrogen and ammonia production, as well as carbon capture and storage.

Among the most significant projects is a potential deal with energy and chemicals sector companies including Korea Electric Power Corp (KEPCO) and Lotte Fine Chemical to explore potential collaboration in the supply, transportation, utilization and certification of hydrogen and ammonia.

The companies also plan to study the feasibility of converting exported ammonia into hydrogen by means of ammonia back-cracking. This could represent a first step toward a potential large-scale production facility for hydrogen and ammonia in Saudi Arabia, which would also include a Carbon Capture and Storage (CCS) facility, Aramco hopes.

With South Korea’s S-Oil, Aramco has tentatively agreed to exchange information related to the Saudi group’s thermal crude-to-chemicals technology and explore a potential collaboration. Also part of the planned broader cooperation is an MoU for the two companies to work together on ammonia offtake and logistics as well as study opportunities for R&D collaboration on low-carbon energy solutions.

The Saudi oil group has also signed separate agreements with steelmaker POSCO and Hyundai Oilbank to exchange information and explore potential collaboration in blue ammonia and blue hydrogen as well as a prospective deal with H2KOREA to exchange information on hydrogen certification and regulatory requirements.

At the Riyadh event, Aramco also signed MoUs on strategic financing, notably with the Export-Import Bank of Korea (KEXIM). With S-Oil it additionally signed an agreement to collaborate on venture capital investment and start-up financing.

Author: Dede Williams, Freelance Journalist

Social Media

LinkedIn | Twitter

Subscribe to our Newsletter!

Newsletter

We keep you posted - Subscribe to the CHEManager International newsletter here!

Social Media

LinkedIn | Twitter

Subscribe to our Newsletter!

Newsletter

We keep you posted - Subscribe to the CHEManager International newsletter here!