Saudi Aramco will invest in a $7 billion (€6.75 billion) project to produce petrochemicals from crude oil at its South Korean affiliate S-Oil Corp's refining complex.
The project in the port city of Ulsan, named Shaheen, is the Saudi company's biggest investment in the country and will mark the first commercial use of Aramco and Lummus technology to produce chemicals from crude, Aramco said in a statement.
The construction of the complex, to produce up to 3.2 MMtpy of petrochemicals, will begin next year and will be completed by 2026, Aramco said.
The chemicals-to-crude unit will have a capacity of 46,000 bpd while the capacity of the cracker unit is 1.8 MMtpy.
Saudi Aramco owns more than 60% of S-Oil.
On completion of the project, S-Oil's chemical yield, by volume, could almost double to 25%, Aramco said.
Global petrochemical demand growth is “anticipated to accelerate, driven in part by rising consumption from Asia’s emerging economies,” chief executive Amin Nasser said in the statement.
Asia's petrochemical sector has faced headwinds this year as slower demand from China forced cracker operators to cut output.
The project provides an outlet for Saudi oil while improving S-Oil's long-term competitiveness as gasoline demand is expected to decline as electric vehicle use increases, analysts said.
The companies first signed a memorandum of understanding in 2019 for the Ulsan project, which was then valued at $6 billion (€5.79 billion).