The Saudi Arabian oil giant, whose current market capitalization is third in the world among all companies and exceeds the two trillion USD mark, has reached an agreement with French integrated oil and gas company TotalEnergies to build a petrochemical complex. The deal amounted to $1 billion and the Admiral project is to be connected to the Saudi Arabia Total Refining and Petrochemical (SATORP) refinery at the port of Jubail on the east coast of Saudi Arabia.
Construction is expected to be completed by 2027 and commercial operations will begin shortly thereafter, representing a significant milestone in the petrochemical industry for both companies involved. The estimated annual capacity of the Admiral complex has climbed to 1.65 million tonnes of ethylene and other industrial gases, a significant advance in the expansion of the region's potential in Saudi Arabia. Saudi Aramco CEO Amin Nasser is pleased with the progress of the cooperation and in achieving the expansion efforts and highlighted the positive impact the agreement will have on the energy sector. Further investments in excess of $4 billion are planned, which will go into sectors such as carbon fibre, lubricants, food additives, automotive components and tyres. The expansion of Saudi Aramco's portfolio and overall footprint thus gives investors the opportunity to be part of a new economic environment and opens the door to innovation. In addition, the expansion will bring 7,000 new jobs, boosting the region's prosperity and the standard of living of its residents.
Saudi Aramco's share performance over the past five years. (Source: Google)
Amin Nasser attended the Energy Asia conference in Kuala Lumpur, where he expressed confidence that the oil industry's market fundamentals will fare the same in the second half of the year. High demand in China and India in particular will contribute to this, while 2 million barrels of oil per day will also offset the risks of recession. On the other hand, Petronas reported a slowdown in demand in the second quarter and uncertainty still hangs in the air about Russian supply and Chinese demand. Peak oil demand is estimated to occur in 2030 and according to leading petrochemical industry leaders, the focus needs to be on natural gas and renewable energy sources such as biofuels and hydrogen.
