DMEA: Aramco cancels refining projects, shifts focus to Asia

Saudi Aramco has revealed that it has halted plans to move forward with a refinery and chemicals project in Saudi Arabia and is also reviewing three more as it continues to focus on expanding its presence in Asia, according to Bloomberg.

The cancelled projects include a planned 400,000 barrels per day (bpd) facility at Ras Al Khair on the Kingdom’s Gulf coast – which was also set to potentially be constructed at Jubail – according to sources with knowledge on the matter.

According to Bloomberg, the decision is a sign that Aramco has begun to shift most of its chemicals spending to Asia – a region where it is also engaged in negotiating deals with China that will guarantee long-term demand for Saudi oil. The company has recently shifted its future outlook away from the commodity overall however – increasing viewing plastics as the future amid the ongoing energy transition and the slow decline of fossil fuel consumption. Most of this chemical expansion is likely to come from Asia.

Other factors forcing Aramco to reconsider its position on moving forward with expensive infrastructure projects include the strength of demand in the Kingdom itself, according to Bloomberg.

Moreover, an additional three planned chemical facilities in Jubail and Yanbu on the Red Sea are also being reconsidered, according to people familiar with plans.

Clarifying its position, Aramco said that it intended to “continue to grow its liquids-to-chemicals business, with a goal to increase its throughput in integrated refining and petrochemicals complexes to up to 4mn bpd 2030,” adding: “We continue to optimise our investments in our global downstream portfolio and updates to specific projects will be made at the appropriate time”.

Additional facets to the project review include Saudi Arabia’s plan to bring forward Crown Prince Mohammed Bin Salman’s plan to develop the country’s economy, which includes the country developing its manufacturing and technology industries. This would rely on locally produced chemicals, leading Aramco to review its wider investment plans in order to cope with demands placed on it by the government, Bloomberg noted.

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