Saudi Aramco and SABIC have signed a memorandum of understanding (MoU) to develop a fully integrated crude oil-to-chemicals (COTC) complex in the Kingdom of Saudi Arabia, which governs the execution of the Front End Engineering Design (FEED) before a final investment decision is made.

The COTC complex is expected to process 400,000 barrels per day of crude oil, which will produce approximately 9 million tons of chemicals and base oils annually and is expected to start operations in 2025.

“This project converges the commercial and strategic interests of both Saudi Aramco and SABIC, while reinforcing Saudi Aramco’s efforts to optimize the investment of our petroleum resources. COTC will also help expand our downstream portfolio, reducing our focus on the transportation sector and securing new and promising commercial opportunities,” Saudi Aramco President and CEO Amin H. Nasser said.

“This venture will contribute to the realization of one of the major aspirations of Saudi Vision 2030, namely achieving economic prosperity by boosting our investment capacity, diversifying the economy and creating jobs for Saudi nationals. It will help strengthen our economic growth and attract world-class quality investments thanks to our unique and strategic geographic location,” SABIC Vice Chairman and CEO Yousef Abdullah Al-Benyan said.

“Today is a historic day, marking the complementary nature of the relationship between SABIC and Saudi Aramco because it is the first time the two largest economic entities in Saudi Arabia jointly enter into a strategic partnership to achieve a pioneering and innovative new technology. Once completed, this project will not only be the largest crude oil-to-chemicals complex in the world, it will also set a new competitive threshold thanks to the project’s mass scale and the benefits derived from our joint collaboration. The project will, therefore, help achieve the respective growth ambitions of SABIC and Saudi Aramco and further establishes the Kingdom as one of the pioneers in the petrochemicals industry,” said Al-Benyan.

This announcement marks a historic alliance between the two largest Saudi global entities and further maximizes value across the entire hydrocarbons chain through integration, which is the new strategy being adopted across the industry as the foreseen lingering low crude oil price environment and anticipated reduction in future demand due to vehicle electrification shifts their focus less on producing liquid fuels. The COTC complex will be constructed based on an innovative configuration that achieves crude oil-to-chemicals conversion that is unprecedented in the industry, the two state-owned companies announced.

This MoU follows the Heads of Agreement (HoA) signed in June 2016 between the two companies, which governed the feasibility study for the development of a fully integrated petrochemicals complex in the Kingdom. A Saudi team developed innovative COTC configurations derived from best-in-class refining and chemical technologies.

The complex is expected to create an estimated 30,000 direct and indirect jobs and by 2030 is expected to have a 1.5% impact on Saudi Arabia’s Gross Domestic Product (GDP), with investments being shared equally by both companies.

Consistent with the Kingdom’s Vision 2030 economic transformation program, this project will support the creation of a world-leading downstream sector in Saudi Arabia, built on four key drivers: maximizing value from the Kingdom’s crude oil production via integration across the hydrocarbon chain; enabling the creation of conversion industries to produce semi-finished and finished goods to help diversify the economy; developing advanced technologies and innovation; and enabling sustainable development in alignment with the Kingdom’s National Transformation Program.