Aramco, Sinopec, and Yasref Plans Major Petrochemical Expansion in Saudi Arabia

Aramco planned to convert up to 4 million barrels of crude oil into petrochemicals daily by 2030.

Plans are moving forward as Aramco, Sinopec, and Yasref agree to create a fully integrated complex in Yanbu, a city in Saudi Arabia, marking a significant expansion in the petrochemical industry.

Aramco, one of the world’s top integrated energy and chemical companies, along with China Petroleum & Chemical Corporation (Sinopec) and Yanbu Aramco Sinopec Refining Company (Yasref), announced they will sign a venture framework agreement (VFA). This agreement will pave the way for the significant expansion of petrochemical operations at Yasref, located in Yanbu on Saudi Arabia’s west coast.

The three companies have entered into a venture framework agreement to promote engineering studies for the project, which involves adding new high-capacity facilities at Yasref or Yanbu Aramco Sinopec Refining Co.

The agreement plans were revealed on Yasref’s 10th anniversary. It will promote the construction of a mixed-feed steam cracker with an annual capacity of 1.8 million tons and an aromatics complex producing 1.5 million tonnes annually.

The project was part of Aramco’s long-term downstream strategy to transform from an oil producer to an integrated energy and chemicals company.

Amin Nasser, president and CEO of Aramco, stated that the Yasref Venture Framework Agreement further helped them deepen their strategic relationship with Sinopec.

He continued that they look forward to collaborating with Sinopec to make Yasref a leading refining and petrochemicals joint venture (JV) and aim to make Saudi Arabia a global leader in energy and chemicals.

As part of the Kingdom’s Vision 2030 plan to reduce its oil dependency, Aramco planned to convert up to 4 million barrels of crude oil into petrochemicals daily by 2030.

Yasref is a joint venture between Aramco (holding 62.5% equity) and Sinopec (holding 37.5% equity). It is a significant hub for refining and petrochemical integration along the Red Sea coast.

The new expansion will optimize the current operations and enhance the joint venture’s capacity to satisfy the growing demand for high-value petrochemical products.

Mohammed Al-Qahtani, Aramco’s downstream president, stated that their strong connection with Sinopec continues to gain power.

He added that the planned Yasref expansion will help fully utilize the company’s resources, which includes converting crude oil daily into petrochemical products.

He stated that since Aramco partners with Sinopec, they can aspire to advance their cutting-edge refining and petrochemical capabilities to produce high-value products, create new jobs, drive industry innovation, and help develop the economy.

Sinopec is a major state-owned energy company in China. Lately, it has been increasing its investment in overseas joint ventures as part of Beijing’s Belt and Road Initiative (BRI).

China introduced the BRI in 2013 as a global development strategy to increase international trade and promote economic growth across Asia, Africa, and Europe.

The BRI aims to build an extensive transportation, energy, and telecommunication infrastructure network inspired by the ancient Silk Road trade routes.

Zhao Dong, president of Sinopec, stated that Yasref, a joint venture representing the China-Saudi energy collaboration, has played a significant role in local economic growth in Saudi Arabia and promoted development in the petrochemical industry.

The Yasref expansion project is a significant milestone, bringing a new phase of more extensive collaboration.

This partnership will help the Kingdom to satisfy its growing petrochemical ambitions as global energy markets shift towards downstream products due to uncertain demand growth for transportation gas.

The International Energy Agency forecasts that petrochemicals will represent more than a third of the growth in oil demand through 2030 since people will increase their usage of plastics, packaging, and industrial products in developing economies.

Yasref is one of several strategic collaborations involving Aramco and Sinopec, including Sinopec Senmei Petroleum Co., Sinopec SABIC Tianjin Petrochemical Co., and Fujian Refining & Petrochemical Co.