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Saudi Aramco slows diversification plans amid industry downturn

September 04/2020

MOSCOW (MRC) -- Oil company Saudi Aramco is reviewing plans to expand at home and abroad in the face of sharply lower oil prices and a heavy dividend burden, reported Reuters with reference to the Wall Street Journal, citing people familiar with the matter.

Aramco will review a USD6.6 billion plan to add petrochemical output at its Motiva refinery in Texas, as well as a big natural-gas project with Sempra Energy in the same state, according to the report.

The state-run company is also pausing investments in refineries in China, India and Pakistan, the WSJ said.

Oil companies globally have been cutting spending across the board to shore up cash as the industry contends with a realization that lower crude prices could be the norm for a long period of time after the COVID-19 pandemic sapped fuel demand.

In Saudi Arabia, Aramco is delaying plans by a year to boost crude production capacity to 13 million barrels a day, from currently about 12 million, the report added.

The company plans to cut its capital spending to between USD20 billion and USD25 billion this year to pay a USD75 billion dividend it pledged to investors during its initial public offering last year, the Financial Times reported last month.

Aramco did not immediately respond to a Reuters request for comment.

As MRC informed earlier, Saudi Aramco has recently suspended plans to participate in a joint venture (JV) to build a USD10-billion refining and petrochemicals complex at Liaoning, China, as the company cuts spending in response to continued low oil prices.

Besides, Saudi Aramco exited plans to participate in a refinery and aromatics JV with Pertamina in Indonesia earlier this year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Motiva Enterprises, Pertamina, Saudi Aramco, Indonesia, China, Russia, Saudi Arabia, USA.
Category:General News
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