Saudi Aramco’s petrochemical capacity
In this series, we discussed Saudi Aramco’s IPO (initial public offering), its reserves, the reason for the IPO, and its upstream and refining capabilities. In this part, we’ll look at Saudi Aramco’s petrochemical capabilities.
Saudi Aramco’s petrochemical production capacity stands at ~7 MTPA (million tons per annum). Its petrochemical products include ethylene, propylene, paraxylene, benzene, polyolefins, and others. Its largest product is paraxylene with a capacity of 2 MTPA. Propylene is next with a capacity of 1.2 MTPA. These capacities don’t include Sadara Chemical Company’s capacities. Its first production was in December 2015.
However, Saudi Aramco’s petrochemical capacities are lower compared to ExxonMobil (XOM). Its petrochemical production capacity stands tall at 23.7 MTPA. In fact, Saudi Aramco’s largest capacity of paraxylene is also lower compared to ExxonMobil’s paraxylene capacity of 3.4 MTPA. ExxonMobil has a huge capacity of 9 MTPA of ethylene and 8.6 MTPA of polyethylene.
Comparatively, Chevron (CVX), Royal Dutch Shell (RDS.A), and BP’s (BP) petrochemical production capacities stand at 13.6 MTPA, 12.8 MTPA, and 18.4 MTPA. For exposure to integrated sector stocks, you can consider the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). XOP has 6% exposure to the sector.
Saudi Aramco’s joint venture with Dow Chemicals (DOW)—namely Sadara Chemical Company and its integrated PlasChem Park (for manufacturing of advanced products)—aims to create one of the largest petrochemical hubs in the world. YASREF commenced operations in April 2015 and SATORP witnessed its first year of operations in 2015. This marks Sadara, YASREF, and SATORP as vital additions to Saudi Aramco’s petrochemical portfolio.
Saudi Aramco is planning to expand its capacities at Petro Rabigh to produce a variety of high-end value-added petrochemical products. Also, Saudi Aramco’s European subsidiary entered into an agreement with LANXESS (a German specialty chemicals company) to develop and produce polymers used by global tires or auto manufacturers, construction, and life science industries.
Saudi Aramco aims to integrate its operations across the value chain to derive the highest value of each molecule of hydrocarbon. With behemoth reserves and production capacity, and expanding refining and petrochemicals capacity, Saudi Aramco is optimizing its value chain to derive higher returns from its business segments and to sustain even at lower points in an oil price cycle.