Aramco's SABIC purchase signals Saudi intention to lead in petrochemicals

The holding was sold by the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), for an estimated $69 billion.

Although the remaining shares are not part of the transaction and Aramco has no plans to acquire them, the deal signals a shift in the country towards a greater focus on petrochemicals rather than fuel.

While Aramco is a significant force in petrochemicals, SABIC’s production capacity in the sector is nearly four times greater, with Reuters estimating a combined capacity of 79 million tons per annum. SABIC's UK holdings include sites in Teesside, Redditch and Northern Ireland.

Commenting on the news, SABIC vice chairman and CEO Yousef Al-Benyan (pictured) said: “I believe the potential rewards of this deal are clear and support our vision to be the preferred world leader in chemicals. 

“SABIC will benefit from the additional scale, technology, investment potential, and growth opportunities Saudi Aramco will bring as a global leader in integrated energy and chemicals production, while remaining focused on meeting the needs of our customers and the creation of value for all our shareholders.”  

The move will strategically position SABIC and Saudi Aramco to “accelerate exciting developments in our global chemicals business” he added.

Internationally, there has been a growing shift in the downstream oil and gas sector from refining towards petrochemicals and increased emphasis on greater integration of the two, in order to allow more agile response to market demands.

Recently, Process Engineering noted the pressure on downstream was driven by a combination of environmental factors, competition from renewable fuel and energy and the growth of consumerism in developing countries.

Saudi Arabia has also been keen to in recent decades to reposition its economy from a heavy dependence on oil and gas, diversifying into various process sectors.