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Aramco and Dow reach MOU

The world’s largest energy supplier, Saudi Aramco (Dhahran, Saudi Arabia) continues to expand into downstream chemical and resin activities through joint ventures, announcing May 12 that it has signed a memorandum of understanding with Dow Chemical Co. (Midland, MI) to construct a world-scale chemical and polymer production facility in Dhahran, Saudi Arabia. Aramco has also recently formed alliances with Sumitomo and ExxonMobil for resin and chemical production in the Middle East and points further (see e-Weekly, July 20, 2006 for an initial report on the Dow/Aramco dealings).
The memorandum means the two parties will now enter into the final phases of negotiations on a joint-venture company to build, own, and operate a facility in Saudi’s eastern province near Ras Tanura. The operation will be integrated with Aramco’s Ras Tanura refinery and Ju’aymah gas-processing sites, which will supply feedstock to the JV company.
The Middle East has been positioned as a potential resin source for exploding polymer consumption in India and China, but in a release, Aramco President and CEO Abdallah S. Jum’ah expressed the belief that a world-scale plant could bolster the germinal Saudi converting industry. “The wide range of chemical materials and plastics to be produced by the joint venture will help spawn other, downstream chemical-conversion industries.”
In addition to basic chemicals, the facility is intended to create monomers, including ethylene, propylene, and vinyl chloride, as well as polymers like polyurethane, epoxy, and polycarbonate.
As reported here (August 17, 2006 e-Weekly), the Middle East has seen some stops and starts in such projects, due to inflationary pressures and a dearth of skilled labor, with the Aramco-Sumitomo partnership in Rabigh seeing its forecast cost of $4.5 billion nearly doubling.—[email protected]
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