DHAHRAN, Saudi Arabia (Reuters) - Saudi Aramco signed a deal on Thursday with two U.S. firms for pilot use of their technologies to convert crude oil to chemicals, helping the state company expand its petrochemical business.
Aramco wants to develop its downstream business as the government prepares to sell up to 5 percent of the world’s largest oil firm in an initial public offering (IPO) this year.
The agreement with CB&I and Chevron Lummus covers “technology that will directly convert crude oil into chemicals,” Aramco Chief Executive Amin Nasser said at the company’s headquarters in Dhahran.
Under the deal, the three firms will pilot technologies to turn 70 to 80 percent of crude intake into chemicals, Nasser said. The aim would be commercialise the process in two years, he added.
“Our strategy is to use oil as a major petrochemicals feedstock in our future projects, leveraging one of the world’s largest and lowest-cost oil reserves,” he added.
Aramco has been integrating its refining with petrochemicals to serve the company’s plans to expand its market share, as well as its efforts to expand its refined products portfolio.
Aramco signed a preliminary deal in November with Saudi Basic Industries Corp (SABIC) to build a chemicals complex to convert crude oil to chemicals directly, bypassing the refining stage, with start-up seen in 2025.
Aramco wants to become a more diversified company, a move that aims to boost its valuation and attract investors for the IPO. The Aramco IPO is a centrepiece of an ambitious plan to diversify Saudi Arabia’s economy beyond oil.
“The use of oil in the petrochemicals sector is likely to become a key source of oil demand growth in the 2020s - in fact, growing by more than 50 percent over the coming two decades,” Nasser said.
He said using oil as a feedstock would “secure a large and reliable home for our future oil production.”
Aramco pumps about 10 million barrels per day (bpd) of crude oil and plans to raise its refining capacity to 8 million to 10 million bpd from around 5 million bpd now.
Writing by Rania El Gamal; Editing by Edmund Blair