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Aramco’s recalibrated chemicals goals reflect realism

26 March 2025

 

Saudi Aramco told consultants and contractors last year that it was revisiting its investment strategy and execution approach for its liquids-to-chemicals programme.

The central ambition of the strategic programme is to derive greater economic value from every barrel of crude produced in Saudi Arabia by converting 4 million barrels a day (b/d) of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

Aramco and its subsidiary, Saudi Basic Industries Corporation (Sabic), had been tasked with establishing 10-11 large mixed-feed crackers by 2030. These petrochemicals crackers, which included greenfield developments and expansions of existing facilities, were to be built both in Saudi Arabia and in overseas markets.

Achieving this ambition required Aramco and Sabic – the main stakeholders in the liquids-to-chemicals programme – to invest a sum of up to $100bn. Amid considerable cost pressures and significant overcapacity in the global chemicals sector, pushing forward with such a capital-intensive campaign was hard to justify. 

However, while Aramco may have streamlined the programme’s remit, the primary goal of attaining a liquids-to-chemicals conversion rate of 4 million b/d within its global portfolio remains unchanged.

In a presentation detailing Aramco’s financial performance and operational activities in 2024, president and CEO Amin Nasser stated that the company had achieved 45% of the target of the liquids-to-chemicals programme as of the end of last year. Also, 53% of Aramco’s crude oil production is utilised by the downstream sector.

This has been achieved through “greater capital efficiency with low-equity and a high-placement strategy”, Nasser said in the presentation.

Moreover, large-scale petrochemicals projects undertaken by Aramco’s joint ventures with foreign partners in South Korea and Saudi Arabia, namely the Shaheen and Amiral developments, respectively, will significantly contribute to the liquids-to-chemicals target when they come online in 2026 and 2027.

Key chemical projects advance

Aramco continues to make progress with projects deemed crucial to its long-term petrochemicals objectives. One such project is the expansion of Aramco affiliate, Saudi Aramco Jubail Refinery Company (Sasref), into the petrochemicals sector.

Aramco has brought China-based Rongsheng Petrochemical Company on board as a joint-venture partner for the proposed project, which is part of the liquids-to-chemicals programme.

Their aim is to convert the Sasref refining complex in Jubail into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery.

The project is in the pre-front-end engineering and design (pre-feed) stage, with Aramco previously saying that the construction of large-scale steam crackers and the integration of associated downstream derivatives into the existing Sasref complex would enhance “its ability to meet growing demand for high-quality petrochemical products”.

Meanwhile, Sabic is in the bid evaluation stage with a major project that involves building an integrated blue ammonia and urea manufacturing complex at the existing facility of its affiliate, Sabic Agri-Nutrients Company, in Jubail. 

The estimated $3bn project, called the low-carbon hydrogen San 6 complex, is part of Sabic’s Horizon-I low-carbon hydrogen (LCH) programme. Contractors submitted bids for the project in March last year.

The San 6 complex will have an output capacity of 3,500 metric tonnes a day, or 1.17 million tonnes a year (t/y), of blue ammonia, and a urea production capacity of 3,850 metric tonnes a day, or 1.28 million t/y.

Carbon dioxide (CO2) from the blue ammonia plant will be utilised for urea production, with surplus CO2 from the ammonia plant and post-combustion carbon capture unit to be exported via a third-party pipeline for subsequent sequestration.

Gas transportation and processing projects

Saudi Arabia was the biggest regional spender on midstream and downstream projects last year. To address incremental volumes of gas entering the grid as Aramco increases its conventional and unconventional gas production, the state enterprise spent more than $17bn on gas processing and transportation projects in 2024.

In April last year, Aramco awarded $7.7bn in engineering, procurement and construction (EPC) contracts for a project to expand the Fadhili gas plant in the Eastern Province of Saudi Arabia. The project is expected to increase the plant’s processing capacity from 2.5 billion cubic feet a day (cf/d) to up to 4 billion cf/d.

In June, Aramco awarded 15 lump-sum turnkey contracts for the third expansion phase of the Master Gas System (MGS-3), worth $8.8bn. Then, in August, the company awarded contracts for the remaining two packages of the MGS-3 project, which were worth $1bn. 

Saudi Aramco divided EPC works on the MGS-3 project into 17 packages. The first two packages involve upgrading existing gas compression systems and installing new gas compressors. The 15 other packages relate to laying gas transport pipelines at various locations in the kingdom.

The Master Gas System expansion will increase the size of the network and raise its total capacity by an additional 3.15 billion cf/d by 2028, with the installation of about 4,000 kilometres of pipelines and 17 new gas compression trains.

So far this year, the Saudi energy giant has selected the main contractor for a major project to develop a large-scale carbon capture and storage (CCS) hub in Jubail Industrial City.

India’s Larsen & Toubro Energy Hydrocarbon has been picked to perform EPC work on the first phase of the project, which is called the Accelerated Carbon Capture and Sequestration (ACCS) scheme, worth $1.5bn.

The aim of the ACCS scheme, which is expected to have nine phases in total, is to capture CO2 from Aramco’s northern gas plants at Wasit, Fadhili and Khursaniyah, as well as from the operations of Sabic and Saudi industrial gases provider Air Products Qudra.

The first phase of the ACCS project will have the capacity to store and sequester up to 9 million t/y of CO2 in the planned CCS hub in Jubail. The main facility that will be built in Jubail will capture streams from the acid gas enrichment units of the Wasit, Fadhili and Khursaniyah plants. The CO2 will be compressed, dried and fed into the collection pipeline system.

MEED’s April 2025 report on Saudi Arabia also includes:

> UPSTREAM: Saudi oil and gas spending to surpass 2024 level
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> BANKING: Saudi banks work to keep pace with credit expansion

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Indrajit Sen

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    After initial concerns that the market would experience a sharp downturn and project cancellations following the onset of conflict in the region, regional president McGrail says WSP has yet to see a single major contract cancelled across its regional portfolio.

    “We have seen some projects re-evaluated – questions around whether the mix between residential and commercial is right, and whether it should be luxury residential,” he says. “But as of today, we have not seen any projects cancelled, which is a real sign of resilience in the market.”

    Under the surface

    That resilience does not mean nothing has changed. McGrail is careful to separate re-evaluation from cancellation. Projects already on site and selling into the market are pressing ahead. It is schemes that have not yet been released for off-plan sales that are being paused and reconsidered.

    “None of the projects we are currently involved in have been put on hold or suspended,” he says. “It is more re-evaluation. Some of that is investor sentiment, but some of it is materials and logistics as well, which people do not necessarily consider.”

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    “Requests for proposals have not slowed down across any of our disciplines or business units,” he says. “We are definitely seeing an uptick in infrastructure.”

    Infrastructure pivot

    That focus points to where McGrail expects the next few years of growth to come from. Rail sits at the centre of the UAE story, alongside road upgrades and other major developments in Abu Dhabi. In Dubai, the clearest signal of intent is the expansion of Al-Maktoum International airport.

    “Al-Maktoum is a really good indicator of the future direction of travel,” he says. “That is not a project that is slowing down. There has been a commitment to Emirates that it will move there, and it is still progressing.”

    The scale of the airport – and the challenge of relocating an airline the size of Emirates in one move – raises the question of how it will be funded. Here, McGrail returns to the theme of stability and to the mechanism that underpins it.

    “One of the beauties of this region is the ability of government to step in,” he says. “They can fund it. If the private sector does start to suffer, that is the backstop. They push money into infrastructure – roads, rail, airports – which keeps our industry moving.”

    Saudi reset

    In Saudi Arabia, the recalibration story predates the conflict, and McGrail says the change should be read as a strength rather than a retreat.

    “I am positive,” he says. “When the reprioritisation started at the beginning of 2025, having lived through the global financial crisis here, I saw the decision to stop, re-evaluate and reprioritise expenditure as a positive. When Vision 2030 was set, Saudi Arabia had not won Expo or the World Cup, so the reprioritisation was the right thing to do. Saudi Arabia will come out of it stronger. Short-term pain, long-term gain.”

    The nature of the work is shifting with the budget. McGrail sees the kingdom moving towards a model long familiar in the UAE, in which core infrastructure and a handful of landmark buildings are delivered first, before surrounding plots are carved up and sold on.

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    That approach is increasingly tied to public-private partnerships (PPPs), although McGrail is measured on how far the model will stretch.

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    The $3bn Taweelah C combined-cycle gas turbine (CCGT) project has been the UAE power sector’s standout contract award this year, accounting for the majority of the $4.17bn in awards as of early September.

    The total is well below the record $12.02bn awarded in 2025, when Abu Dhabi’s $6bn round-the-clock solar photovoltaic (PV) and battery energy storage system (bess) project lifted the market to record levels. However, 2026 remains broadly consistent with recent years, compared with $5.93bn in 2024 and $3.05bn in 2023.

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    The storage component will allow Dewa to use more solar power after sunset, reducing the gap between daytime generation and the evening demand peak.

    The 1,800MW sixth phase is also nearing completion, with Larsen & Toubro delivering the estimated $1.5bn project for Shuaa Energy 4, the project company formed by Dewa and Masdar.

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    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Royal Commission for Riyadh City (RCRC) has signed contracts worth about SR5.5bn ($1.5bn) to procure 94 additional trains for the Riyadh Metro network.

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    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
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    Register for MEED’s 14-day trial access 

    The US Department of State has initiated market research to procure a design-and-build contract for the US Pavilion at Expo 2030 Riyadh.

    According to procurement documents released through the US federal contracting portal, the project covers the full design, construction, exhibition fit-out, maintenance, and eventual decommissioning and removal of the national pavilion.

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    The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event.

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    The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched Expo 2030 Riyadh Company – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20580855/main.jpeg
    Yasir Iqbal