Saudi Aramco and SABIC have signed a memorandum of understanding (MoU) to develop a fully integrated crude oil–to–chemicals (COTC) complex in Saudi Arabia. Front-end engineering design (FEED) will now be performed prior to a final investment decision, which is expected by the end of 2019.

The complex is planned to process 400,000 barrel per day of crude oil to produce roughly 9 million t/y of chemicals and base oils. Operations are anticipated to begin in 2025.

A location for the complex has not been disclosed. Media reports said the CEOs were considering Yanbu but other options were also being reviewed. The MoU marks the first strategic partnership between the two Saudi giants.

SABIC’s vice chairman and CEO, Yousef Abdullah Al-Benyan, said that when the project is completed it will be the world’s largest crude oil-to-chemicals complex and will set a new competitive threshold, thanks to its mass scale. Moreover, it will “ help achieve the respective growth ambitions of SABIC and Saudi Aramco and further establishes the Kingdom as one of the pioneers in the petrochemicals industry,” he said.

Saudi Aramco’s president and CEO, Amin Nasser, added that the COTC will also help expand his company’s downstream portfolio, reduce its focus on the transportation sector and secure new and promising commercial opportunities.

The MOU follows a heads of agreement signed in June 2016, under which the companies performed a feasibility study for developing a fully integrated petrochemicals complex in the Kingdom. The companies said a Saudi team has developed innovative COTC configurations derived from best-in-class refining and chemical technologies.

By 2030, the COTC complex is expected to contribute 1.5% to Saudi Arabia’s GDP, with investments being shared equally by both companies. It is also expected to create around 30,000 direct and indirect jobs.

In March this year, both Aramco and SABIC signed MoUs with Chinese companies to develop refining and petrochemical plants. The companies are looking to form joint ventures in China and Saudi Arabia that target key downstream markets, including automotive, electronics, lighting, building & construction, packaging and medical equipment, as part of the Kingdom’s Vision 2030 to diversify from just exporting oil.