Saudi Aramco and Total (ticker: TOT) have signed a memorandum of understanding to build a giant petrochemical complex in Jubail, Saudi Arabia.
Located next to the SATORP refinery in the same industrial area, the complex will comprise a mixed-feed steam cracker (50% ethane and refinery off-gas) with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units. The project will represent an investment of around $5 billion. The two partners are planning to start the front-end engineering and design (FEED) in the third quarter of 2018.
The cracker will feed other petrochemical and specialty chemical plants, representing an overall amount of $4 billion investment by third-party investors.
In total, $9 billion will be invested, creating 8,000 local direct and indirect jobs. The project will produce more than 2.7 million metric tons of high value chemicals.
The complex will be integrated downstream of the SATORP refinery, a joint venture between Saudi Aramco (62.5%) and Total (37.5%) in Jubail. SATORP’s capacity increased from 400,000 BPD in 2014 to 440,000 BPD.
More jobs, less welfare for Saudi
In December 2017, Saudi Arabia said it planned to spend $261 billion in 2018. The reduction of government-sponsored welfare programs plays a large role, seeing as how government expenditures took up 40.8% of the country’s GDP in 2014. CNBC reported that Saudi Arabia was seeking to reduce the 12.8% of people without jobs.
Saudi Aramco and SABIC are also building a mega oil-to-chemicals complex – priced at $20 billion, the complex should create about 30,000 jobs, directly and indirectly, adding 1.5% to Saudi Arabia’s GDP by 2030.
