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Petro Rabigh and Honeywell sign NEP agreement

31 January 2025

Saudi Arabia's Rabigh Refining & Petrochemical Company (Petro Rabigh) has signed a non-binding agreement with US-headquartered Honeywell to explore the deployment of Honeywell UOP’s naphtha-to-ethane-and-propane (NEP) technology.

The non-binding memorandum of understanding (MoU) represents a significant milestone in leveraging advanced technologies to transform butane and naphtha into high-value feedstocks for light olefin production, such as ethylene and propylene, a joint statement said.

NEP converts light naphtha and butanes into ethane and propane, providing what Honeywell describes as "a flexible, cost-effective, and sustainable solution" for ethylene and propylene production.

The MoU aims to enhance productivity, operational efficiency and sustainability "through the production of value-added petrochemical products from crude oil".

Supported by the Energy Ministry, the initiative also aligns with the goals of Saudi Vision 2030 to drive innovation in the energy sector, promote liquid-to-chemical (LTC) processes, and improve energy efficiency and economic resilience, the statement added.

Petro Rabigh was originally established as a basic topping refinery, with crude oil processing facilities, at Rabigh on the kingdom’s Red Sea coast to the north of Jeddah.

However, in 2005, Aramco and Japan's Sumitomo Chemical Company formed an equal joint venture to transform the business into an integrated refinery and petrochemicals complex.

In August last year, Aramco announced signing an agreement with Sumitomo Chemical to acquire an additional 22.5% stake in Petro Rabigh.

Aramco and Sumitomo Chemical presently own 37.5% shares each in Petro Rabigh, with the remaining 25% shares trading on the Saudi Exchange (Tadawul) since 2008.

Following the completion of the transaction, which is priced at SR7 ($1.86) a share, Aramco will become the majority shareholder in Petro Rabigh, with a 60% stake, and Sumitomo Chemical will retain a 15% stake.

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Jennifer Aguinaldo

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    This was confirmed by a social media post on 14 January, when UAE President Sheikh Mohamed Bin Zayed Al-Nahyan said the project would help power advancements in AI and emerging technologies in addition to being a significant step on the UAE’s journey towards net zero.

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    Masdar has been expanding its global footprint as well as the type of assets it deploys or acquires, which range from onshore and offshore solar, onshore and offshore wind and, now, battery energy storage plants.

    It has been bidding for new projects close to home, such as in Saudi Arabia and Oman, as well as in developing countries or acquiring stakes in projects across nearly every region of the world, from the Philippines, Malaysia and Indonesia in Southeast Asia, to Africa, more mature markets in Europe such as Greece and Spain, and the Americas.

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    “We are backed by three very strong institutions,” he points out, referring to Abu Dhabi National Oil Company, Abu Dhabi National Energy Company (Taqa) and sovereign wealth fund Mubadala. “So every investment opportunity is thoroughly assessed to ensure it meets our growth objectives and stakeholders’ expectations.”

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    Abu Dhabi has recently launched a $6bn project that combines 5,200MW of solar and 19 gigawatt-hours (GWh) of battery energy storage capacity to deliver 1,000MW of round-the-clock renewable power capacity, a world first. 

    The project addresses the intermittency of renewable energy, which UAE Industry & Advanced Technology Minister Sultan Al-Jaber describes as the “moonshot challenge” of our time.

    The goal is to deliver clean baseload capacity much more quickly and at a lower price than a gas or nuclear power plant.

    At approximately $60 a megawatt-hour, the project aligns with the mandate of Emirates Water & Electricity Company (Ewec) to deliver the lowest-cost energy transition.

    Abu Dhabi Future Energy Company (Masdar) will develop the project, which will help to boost its gross capacity, in line with expanding its renewable energy portfolio to 100GW by 2030.

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    This is in addition to the 1.5GW of annual renewable capacity that Ewec intends to procure until at least the mid-2030s, in line with decarbonising the emirate’s electricity system and reaching net zero by 2050.

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    AI and power link 

    In December, the US government reportedly approved the export of advanced artificial intelligence (AI) chips to a Microsoft-operated facility in the UAE, as part of the technology giant’s $1.5bn partnership with Mubadala-backed AI firm G42.

    Three months earlier, in September, Sheikh Tahnoon Bin Zayed Al-Nahyan, deputy ruler of Abu Dhabi and national security adviser, met with Jake Sullivan, US national security adviser, in Washington to seal an agreement known as the Common Principles for Cooperation on AI, following a meeting between UAE President Mohamed Bin Zayed Al-Nahyan and then-US President Joe Biden.

    The meeting took place a few days after US-based equity investment firm BlackRock announced a $100bn tech investment platform called Global AI Infrastructure Investment Partnership.

    The fund’s partners include Mubadala-backed AI fund MGX, which aims to build $100bn in assets under management; US-based Global Infrastructure Partners; and Microsoft.

    In January, MGX teamed up with US tech giant Oracle, Japan’s Softbank and ChatGPT creator Open AI to form the Stargate project, a joint venture that aims to invest $500bn in building AI infrastructure in the US over the next four years.

    Abu Dhabi has not denied the link between its clean energy capacity buildout and the UAE’s national, and perhaps international, AI strategy.

    A social media post on 14 January by President Mohamed Bin Zayed confirmed the 1GW solar plus battery project will directly support Abu Dhabi’s AI plans.

    “The project will help power advancements in AI and emerging technologies, supporting delivery of the UAE National Strategy for Artificial Intelligence 2031 and the Net Zero by 2050 strategic initiative,” he said.

    Investing in and developing AI infrastructure and applications at home and abroad is now a UAE government priority. It will create jobs and new revenues, and will boost efficiencies in every facet of governance and business.

    “The UAE is well positioned [in the developing AI industry],” says Michael Liebreich, managing partner at UK firm EcoPragma Capital, noting that it has “the energy status, geographical advantage and regulatory framework”.

    In light of a new US regulation made public in January that restricts access to US-made AI chips, he adds that “you don’t want to have a situation where the UAE will have to choose between one or the other”, referring to the ongoing power struggle over AI between China, an important energy and trade partner of the UAE, and the US, which is a vital political ally.

    Investing in and developing AI infrastructure and applications … is now a UAE government priority

    Choosing sides

    It appears that this choice has been made previously, however.

    In an interview in early 2024, G42 CEO Peng Xiao said that his firm is cutting ties with Chinese hardware suppliers in favour of US counterparts, adding: “We cannot work with both sides.”

    In addition, in December, Axios – the US media outlet that reported the clearance of AI chip exports by the US to the Microsoft and G42 facility in Abu Dhabi – suggested that the deal is part of efforts by the US government to elbow China out of the UAE’s expanding tech industry.

    In Abu Dhabi, Ewec is tasked not only with decarbonising its electricity system by integrating solar and nuclear plants into its gas-dominated power-generation fleets, but also with ensuring 24×7 clean and cheap baseload capacity gets delivered to a project that is a national priority.

    An expanding AI industry will also increase the scope for environmental, social and governance (ESG) compliance.

    While it is widely accepted that the use of advanced AI solutions such as large- or small-language models or agentic AI for industrial applications can enable some sectors to cut emissions, AI requires hyperscale data centres, and data centres generally are as polluting as the airline industry.

    Although the high temperatures and water scarcity of the Middle East can be addressed by another ESG-sensitive industry – seawater desalination – these factors can lead data centres in the region to be more carbon positive than those in other geographies.

    For this reason, Abu Dhabi’s 5.2GW/19GWh project is considered a major milestone, potentially blazing a trail that other regions can follow – assuming it is implemented on time and within budget, and despite opposing opinions on its technical and commercial feasibility.

    Main image: Sheikh Tahnoon Bin Zayed Al-Nahyan, deputy ruler of Abu Dhabi and national security adviser, and Jake Sullivan, US national security adviser, signed a cooperation agreement on AI in September 2024. Credit: Wam

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    READ MEED’s YEARBOOK 2025

    MEED’s 16th highly prized flagship Yearbook publication is available to read, offering subscribers analysis on the outlook for the Mena region’s major markets.

    Published on 31 December 2024 and distributed to senior decision-makers in the region and around the world, the MEED Yearbook 2025 includes:

    > GIGAPROJECTS INDEX: Gigaproject spending finds a level
    https://image.digitalinsightresearch.in/uploads/NewsArticle/13353267/main.gif
    Jennifer Aguinaldo