State-controlled Saudi Aramco and petrochemical producer Sabic are reassessing plans for a $20bn integrated crude-to-chemicals project at Yanbu, in the first sign of a change in strategy in the sector since the Covid-19 economic downturn.
Aramco and Sabic signed a preliminary agreement in 2017 for the project at Yanbu on Saudi Arabia's west coast. The crude-to-chemicals plant would process 400,000 b/d of crude to produce some 9mn t/yr of chemicals and base oils, in the largest such project of its kind anywhere in the world.
But the two companies announced yesterday that they are instead considering integrating Aramco's existing refineries in Yanbu with a mixed feed steam cracker and derivative olefins units. This will increase cost efficiency and competitiveness as well as creating value opportunities for petrochemicals, they said.
The reassessment of the project comes on the back of a collapse of oil demand and prices caused by the Covid-19 pandemic, which has prompted producers worldwide to re-evaluate their energy projects to conserve cash.
It is also the first reassessment of a crude-to-chemicals integrated project since the pandemic started. A trend for such integrated investments had started to emerge, as oil companies aimed for feedstock cost efficiencies and as petrochemical margins outstripped refining margins in recent years.
Aramco completed the acquisition of a 70pc stake in Sabic in July, as part of its long-term downstream strategy to grow its integrated refining and petrochemicals capacity.
