Trump visit yields downstream progress
Thursday, Jun 08, 2017
Riyadh and Washington have announced several commitments to joint downstream investment, both within the kingdom and the US, following the recent meeting between the two heads of state.

State oil giant Saudi Aramco pledged to spend billions of dollars on expanding in the Americas through Texas-based refiner Motiva Enterprises – which became a wholly owned subsidiary at the start of the month.

US-based Dow Chemical, Aramco’s partner in the groundbreaking Sadara petrochemicals complex nearing completion at Jubail, announced plans to establish two new facilities in the kingdom.

Meanwhile, Riyadh’s traditional petrochemicals champion, Saudi Basic Industries Corp. (SABIC), affirmed its intention to progress to detailed studies on its planned ethylene complex on the US Gulf Coast following recent site selection.

Motiva formally became a 100% subsidiary of Aramco on May 1 with the US$2.2 billion divestment by former equal partner Royal Dutch Shell.

The firm’s main asset is a refinery at Port Arthur in Texas – which became the US’ largest after a US$12 billion expansion completed in 2012 taking capacity to 600,000 bpd.

Speaking during the Saudi-US CEO Forum in Riyadh on May 20, Aramco head Amin Nasser announced plans to invest US$18 billion in US downstream, chiefly through Motiva, by 2023. Further refinery expansion and the extension of the American asset’s operations into the petrochemicals sector are being mooted.

The pledge was later confirmed in a statement directly from Motiva: “As a wholly owned affiliate of Saudi Aramco, Motiva is expected to be the primary focus of an US$18 billion growth effort throughout the Americas and is exploring opportunities to increase refining capacity, breach into chemicals, and expand its commercial operations, marketing and branded presence over the next five years,” the company said.

The terms of the Shell separation gave Aramco the rights to retain ownership of the Motiva brand name and allocated the Saudi firm 24 distribution terminals supplying 5,300 retail outlets across various southern states.

Nasser was quoted as claiming that Aramco was examining the acquisition of an additional US refinery and had assessed three chemical plants being put up for sale by their undisclosed owners.

The Motiva statement also noted that an increase in capacity of the Port Arthur facility’s largest hydro cracking unit and diesel hydrotreater – raising capacity by around 30% to 105,000 bpd – had recently been completed. It added that a new marine terminal at the site, being developed with US midstream counterpart Northstar, was scheduled for completion in July.

Meanwhile, SABIC is set to beat its parastatal rival in establishing petrochemicals production capacity in the US. A long-standing ambition to expand into shale gas-based output was realised in July in the form of an agreement with US heavyweight ExxonMobil to conduct studies into the development of a complex comprising a 1.8 million tpy ethane cracker and derivatives units, with a site near Corpus Christi in Texas selected in early May.

An agreement was signed on May 20 committing the two firms to proceeding with engineering design and technical and commercial studies on the estimated US$10 billion plant – which is envisaged including a mono-ethyelene glycol unit and two polyethylene units.

A final investment decision (FID) – regarded as a near-certainty – is expected to be taken in 2018, the two firms said. Exxon and SABIC have jointly produced chemicals within the kingdom for more than 30 years through their Jubail Petrochemical and Yanbu Petrochemical joint ventures at the east and west coast industrial hubs.

Aramco’s largest ongoing domestic petrochemicals investment is a 50% stake alongside Dow in the Sadara Chemical joint venture, the project company for a greenfield US$20 billion chemical complex at Jubail. The unit comprises a mixed-feed cracker and 26 downstream units with capacity of around 3 million tpy of a broad slate of products.

With completion scheduled for later this year, the focus is increasing on the adjacent PlasChem Park. The facility is being developed by the government’s Royal Commission for Jubail & Yanbu in co-operation with Sadara into an industrial cluster of specialist and conversion industries feeding off the new complex.

Dow announced during President Donald Trump’s visit plans for a new plant at the industrial zone to manufacture a range of acrylic-based polymers for coatings and water-treatment applications.

The US giant also signed a memorandum of understanding (MoU) to carry out a feasibility study into development at an unspecified location of a “fully integrated, world-scale siloxanes and high-performance silicones complex”. It said this would target markets including the oil and gas, solar, automotive and especially buildings sectors.

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