Picture: ISTOCK
Picture: ISTOCK

Houston — Saudi Aramco took the first steps to integrating a petrochemicals business into the US’s biggest oil refinery, which is operated by its subsidiary Motiva Enterprises.

Aramco CEO Amin Nasser signed memoranda of understanding worth $8bn to $10bn with Honeywell UOP and TechnipFMC to study petrochemical production technology for use in a chemical plant the company is considering building at the Port Arthur refinery.

Saudi Arabia’s Crown Prince Mohammed bin Salman, who was winding up a two-week visit to the US, was present at the signing in Houston on Saturday, along with Saudi Energy Minister Khalid al-Falih and US Energy Secretary Rick Perry.

"These agreements signal our plans for expansion into petrochemicals," Motiva CEO Brian Coffman said.

Aramco, which wants to develop its downstream business as the government prepares to sell up to 5% of the world’s largest oil firm in an initial public offering in 2018, wants to use oil as a major petrochemicals feedstock.

Coffman said Motiva was evaluating boosting the 603,000-barrel-per-day (bpd) Port Arthur refinery’s capacity to 1-million or 1.5-million bpd, which would make it the largest in the world.

The aromatics unit for which Honeywell UOP’s technology is being considered under one of the memoranda of understanding would convert benzene and paraxylene, byproducts of petrol production, into 2-million tonnes annually of feedstocks for chemicals and plastics.

More plastics

The other memorandum of understanding would allow Aramco to use TechnipFMC’s mixed-feed ethylene production technologies in the US.

The technology would produce 2-million tonnes a year of ethylene, which is used to make plastics, Motiva said.

The final investment decision on setting up a multibillion- dollar petrochemical plant at Port Arthur was not expected until 2019, and was "dependent on strong economics, competitive incentives and regulatory support", Aramco said.

Coffman did not provide a timeline for the possible expansion of the Port Arthur refinery’s crude oil processing capacity.

The 1.2-million bpd Reliance Industries refinery in Jamnagar, India, has the world’s largest crude oil processing capacity.

Aramco said in 2017 that it would invest $18bn in Motiva to expand the refinery and move into petrochemical production.

Other US companies, including Chevron Phillips Chemical — a joint venture of Chevron and Phillips 66 — and Exxon Mobil, have recently opened plants, like the one Motiva is considering, to process ethane into ethylene. Chevron Phillips is considering building a second ethane cracker on the Gulf Coast of Texas.

The price tag for a large ethane cracker is typically over $6bn, analysts say. In addition to taking refining byproducts, ethane crackers provide hydrogen for refineries to use in making motor fuels.