Aramco, TotalEnergies award contracts for $11bn petchem complex

Image credit: Saudi Aramco

Saudi Aramco and French energy giant TotalEnergies have awarded contracts for the $11bn (SAR41.3bn) ‘Amiral’ complex, a new petrochemical facility that is being built at the SATORP refinery in Saudi Arabia.

The awarding of engineering, procurement and construction (EPC) contracts for main process units and associated utilities marks the start of construction work on the joint petrochemical expansion, following the final investment decision in December 2022.

“Today we are taking a major step forward in further strengthening the partnership between TotalEnergies and Aramco, with the SATORP expansion project being the latest in a longstanding history of collaboration of almost five decades between both companies,” said Amin H. Nasser, Aramco president & CEO.

The new complex aims to house one of the largest mixed-load steam crackers in the GCC region, with a capacity to produce 1,650 kilotons per annum of ethylene and other industrial gases.

The latest expansion of our SATORP refinery advances our liquids-to-chemicals strategy and expands our petrochemical value chain

Learn more?https://t.co/c5M64mn99J#aramco90th#aramco pic.twitter.com/MRFfrse68I

— aramco (@aramco) June 24, 2023

The expansion is expected to attract more than $4bn in additional investment in a variety of industrial sectors, including carbon fibres, lubes, drilling fluids, detergents, food additives, automotive parts and tires. It is also expected to create around 7,000 direct and indirect jobs within the kingdom.

Aramco and TotalEnergies, in a joint statement, said that the EPC contracts were Hyundai Engineering & Construction, Maire Tecnimont, Sinopec Engineering Group and Gulf Consolidated Contractors.

Aramco growth prospects

Meanwhile, Fitch Ratings upgraded Aramco’s long-term foreign and local currency issuer default ratings in April, citing the company’s strong business profile and its ambitions to deliver a “sustainable and progressive dividend”.

The rating agency upgraded Aramco’s rating to A+ from A with a stable outlook. “Saudi Aramco is the world’s largest oil producer and Saudi Arabia’s national oil company. Its financial profile benefits from strong pre-dividend free cash flow generation, conservative financial policies and a net cash position,” said Fitch.

In May, the oil major reported first-quarter net profits of $31.9bn, a 19.25 per cent decrease compared to $39.5bn during the same period a year earlier due to lower crude oil prices.

Quarterly, the energy firm’s net profit was 3.75 per cent higher than $30.73bn for the fourth quarter of 2022. Aramco plans to increase investment to capture unique growth opportunities and create long-term value for shareholders, as the company expects hydrocarbons to continue playing a central role in the global energy mix for the foreseeable future.

The oil major is targeting capital expenditure of $45bn to $55bn for 2023. It agreed to acquire a 10 per cent stake in China’s Rongsheng Petrochemical Company Limited (Rongsheng Petrochemical) for SAR13.5bn in March as part of its broader growth strategy.

Aramco’s joint venture in China, Huajin Aramco Petrochemical Company, started the construction of a major integrated refinery and petrochemical complex in the country’s northeastern Liaoning province in Q2 2023.

Read: Saudi Arabia transfers 4% Aramco stake to PIF