State oil giant Saudi Aramco and petrochemical producer Saudi Basic Industries Corp have signed a memorandum of understanding on Sunday to build a $20 billion complex converting crude oil to chemicals in the kingdom.
The project is a sign that the Saudi government plans to spend heavily on diversifying the economy beyond crude oil exports.
Saudi Aramco CEO Amin Nasser said he expects the possible deal announced to be one of the largest projects known to the industrial and oil sectors in Saudi Arabia throughout its history.
“What distinguishes this project is not its size, which will make it the largest in the world, but also the design and innovative configuration of its industrial processes,” Nasser said after the signing.
“I am pleased to say with great pride that this innovative design has been greatly developed through research centers in the Kingdom, with the use of a global network of experts, researchers and specialists,” he added.
Riyadh aims to invest billions of dollars on developing value-added manufacturing industries such as chemicals, as well as service industries like tourism.
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The complex would start operations in 2025, processing about 400,000 barrels per day of Arabian Light crude oil to produce about 9 million tonnes of chemicals and base oils annually, plus 200,000 bpd of diesel for domestic consumption.
SABIC’s chief executive Yousef al-Benyan said the project was the first time that Saudi Arabia’s two biggest companies were cooperating on a joint industrial project using a new technology. Investment costs would be shared equally.
Aramco, the world’s largest oil company, has been developing its downstream business as it prepares for the government to sell off about 5 percent of its shares next year, a privatization exercise which Riyadh says could raise around $100 billion.
The new complex would create an estimated 30,000 jobs directly and indirectly and add 1.5 percent to Saudi Arabia’s gross domestic product by 2030, the companies said.