Saudi Aramco, Total sign agreement for giant petrochemicals complex in Jubail

Aramco and Total have signed the agreement in Dhahran to build the world-class complex announced last April. (SPA)
Updated 14 October 2018
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Saudi Aramco, Total sign agreement for giant petrochemicals complex in Jubail

  • Aramco and Total have signed the agreement in Dhahran to build the world-class complex
  • The project represents an investment of approximately $5 billion and is scheduled to start operating in 2024

JEDDAH: Saudi Aramco and Total signed on Monday a joint development agreement for a giant petrochemical complex in the Kingdom’s Jubail Industrial City.

President and CEO of Saudi Aramco, Amin H. Nasser, and the CEO of Total, Jean Pouyanné, have signed the agreement in Dhahran to build the world-class complex announced last April.

The site will be located next to the cutting edge SATORP refinery and will be joint operated by Saudi Aramco and Total.

It will comprise a mixed-feed cracker – the first in the Arabian Gulf to be integrated with a refinery – with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units.

The project represents an investment of approximately $5 billion and is scheduled to start operating in 2024.

The project will also provide feedstock for other petrochemical and specialty chemical plants located in the Jubail industrial area and beyond, representing an additional $4 billion investment by third party investors, benefitting the Saudi economy.

Overall, the complex represents an investment of approximately $9 billion and is expected to create 8,000 local direct and indirect jobs.

“The petrochemicals sector has been undergoing significant growth globally and is one of the future growth engines,” Aramco CEO Nasser said.

“SATORP’s second-phase expansion represents a significant value addition in Saudi Aramco’s downstream strategy to maximize the full value of our vast resources portfolio and position the Kingdom as a chemicals manufacturing and exports hub, supporting economic growth and diversification as part of Vision 2030.”

Total CEO Pouyanné said: “We are delighted to write a new page of our joint history by launching a new giant project, building on the successful development of SATORP, our biggest and most efficient refinery in the world.”

Saudi Aramco and Total signed a memorandum of understanding (MoU) in April.


OPEC cut ‘biggest in almost 2 years’

Updated 59 min 40 sec ago
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OPEC cut ‘biggest in almost 2 years’

  • OPEC said in a monthly report its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd
  • OPEC expects 2019 global oil demand growth to slow to 1.29 million bpd from 1.5 million in 2018

LONDON: OPEC said on Thursday it had cut oil output sharply in December before a new accord to limit supply took effect, suggesting producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand.
The Organization of the Petroleum Exporting Countries said in a monthly report its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd, the biggest month-on-month drop in almost two years.
Worried by a drop in oil prices and rising supplies, OPEC and its allies, including Russia, agreed in December to return to production cuts in 2019. They pledged to lower output by 1.2 million bpd, of which OPEC’s share is 800,000 bpd.
The reduction in December means that should OPEC fully implement the new Jan. 1 cut, it will avoid a surplus that could weaken prices. Oil slid from $86 a barrel in October to below $50 in December on concerns of excess supply.
OPEC expects 2019 global oil demand growth to slow to 1.29 million bpd from 1.5 million in 2018 although it was more upbeat about the economic backdrop than last month and cited better sentiment in the oil market, where crude is back above $60.
“While the economic risk remains skewed to the downside, the likelihood of a moderation in monetary tightening is expected to slow the decelerating economic growth trend in 2019,” OPEC said.
“This has recently been reflected in global financial markets. The positive effect on market sentiment was also witnessed in the oil market,” it said.
The supply cut was a policy U-turn after the producer alliance known as OPEC+ agreed in June 2018 to boost supply amid pressure from US President Donald Trump to lower prices and cover an expected shortfall in Iranian exports.
OPEC changed course after the slide in prices starting in October. A previous OPEC+ supply curb starting in January 2017 — when OPEC production fell by 890,000 bpd according to OPEC figures — got rid of a glut formed in 2014-2016.
In a sign of excess supply, OPEC’s report said oil inventories in developed economies had stayed above the five-year average in November.
The biggest drop in OPEC supply last month came from Saudi Arabia and amounted to 468,000 bpd, the survey showed.
Saudi supply in November had hit a record above 11 million bpd.
The Kingdom told OPEC it lowered supply to 10.64 million bpd in December and has said it plans to go even further in January by delivering a larger cut than required under the OPEC+ deal.
The second-largest was an involuntary cut by Libya, where unrest led to the shutdown of the country’s biggest oilfield.
Output from Iran posted the third-largest decline, also involuntary, as US sanctions that started in November discouraged companies from buying its oil.
Iran, Libya and Venezuela are exempt from the 2019 supply cut deal and are expected by some analysts to post further falls, giving a tailwind to the voluntary effort by the others.
OPEC said in the report that 2019 demand for its crude would decline to 30.83 million bpd, a drop of 910,000 bpd from 2018, as rivals pump more and the slowing economy curbs demand.
Delivering the 800,000 bpd cut from December’s level should mean the group would be pumping slightly less than the expected demand for its crude this year and so avoid a surplus. Last month’s report had pointed to a surplus.
The figures for OPEC production and demand for its crude were lowered by about 600,000 bpd to reflect Qatar’s exit from the group, which now has 14 members.