Dubai — Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, according to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices.
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The $20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said.
"Both parties intend to re-evaluate the scope of the crude-oil-to-chemicals (COTC) complex project and study the integration of Saudi Aramco's existing refineries in Yanbu with a world-scale mixed feed steam cracker and downstream olefin derivative units," the statement said.
The COTC project was announced in November 2017, before Aramco announced it intended to acquire a majority stake of SABIC. At the time, the project was intended to process 400,000 b/d of crude oil, to produce about 9 million mt/yr of chemicals and base oils, after entering commercial operation in 2025. I
n 2018, the project management and front-end engineering contracts were awarded to Wood and KBR, respectively.
It was part of an ambitious downstream push by Aramco to double its crude processing capacity to create outlets for its crude oil. But Aramco, the world's biggest company, has been severely hit by the oil price downturn and diminishing demand caused by the COVID-19 pandemic.
In August, Saudi Aramco, the world's biggest company, saw its profit crash by 73% in Q2 to Riyals 24.62 billion ($6.6 billion). It has announced drastic cutbacks in its capex program, as a result.
In June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion ($69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.
Aramco's Q3 results will be announced on Nov. 3.