Aramco, Sabic One Step Closer to Turning Oil Into Chemicals

(Bloomberg) -- Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are one step closer to building their first plant to process crude directly into chemicals, cutting out a costly intermediate link in the production of plastics.

Aramco and Sabic, as the state-owned companies are known, signed an agreement Tuesday for a feasibility study to build the project in Saudi Arabia, possibly in a joint venture, they said in a statement. The study is due to be completed by early 2017, they said. Oil companies normally refine crude into transportation fuels including gasoline and diesel and leave byproducts such as naphtha to be processed separately into chemicals.

The companies could “substantially” increase Saudi Arabia’s production of petrochemicals, while enabling them to boost exports and spur industrial diversification, Aramco Chief Executive Officer Amin Nasser, said in the statement. Aramco and Sabic are also studying “possible” joint investment in shale gas, Sabic CEO Yousef Abdullah Al Benyan said at the signing ceremony.

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