Saudi Arabia’s Aramco has been researching for years ways to extract chemicals directly from crude oil, without having to refine it first. According to a recent press release, the government of Saudi Arabia has been successful in its endeavors and is planning to construct an oil-to-chemical plant in the city of Yanbu.

The nation’s oil minister, Ali bin Ibrahim Al-Naimi, released this information in a press conference on Tuesday. Saudi Basic Industries Corporation (TADAWUL:2010), one of the largest petrochemical corporations in the world, has collaborated with the government for the development of this technology and will share a large chunk of the profits.

New technology

Chemical plants normally need to purchase refined crude oil products to convert them into petrochemical products such as propylene and ethylene. These chemicals are then further used to make plastics and other products. Ethylene is the basic building-block for making a wide variety of chemical and polymer products, including polyethylene. It is primarily used in plastic packaging, containers and films, detergents, cosmetics and paints. Propylene happens to be the main ingredient for making polypropylene, polymers and other chemicals. This chemical is used in carpeting, upholstery, pleasure boats and automotive.

Exxon Mobil Corporation (NYSE:XOM) was the first company to develop this technology and set up the first oil-to-chemical plant in Singapore. Singapore Olefins Plant (SOP) comprises of two world-scale steam crackers that use proprietary technology to process hydrocarbon feed molecules in to basic building blocks such as ethylene and propylene.

Saudi Arabia To Build Oil-To-Chemical Plant In Yanbu

Significant move for Saudi Arabia petrochemical sector

Saudi Arabia has long been searching for new technologies to develop its petrochemical sector. The government has made conscious efforts to diversify its exports from solely crude oil revenues by offering value-added products at competitive rates. A plant that extracts chemicals directly from crude oil is only a step towards achieving Riyadh’s strategy.

“An innovative technology is being studied by the ministry, in collaboration with SABIC, to set up an integrated industrial complex for the production of petrochemicals from crude oil without the need to build a conventional oil refinery,” Naimi told a conference in the Red Sea coastal port of Yanbu, located about 300 km northwest of Jeddah. He also said the chemicals project would help provide jobs for Saudi Arabia youth in the growing industrial port, home to several petrochemicals plants and oil refineries.

This chemical technology not only cuts the cost of manufacturing chemicals from crude oil but also reduces the environmental footprint created by the conversion process. By cutting down on the refining step and the associated polluting processes, an oil-to-chemical plant proves to be more environment friendly.