DHAHRAN: Saudi Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude, and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand.
Aramco, the world’s biggest oil producer, is expanding its footprint globally by signing downstream deals and boosting the capacity of its plants, ahead of an initial public offering next year — the largest IPO in history.
The state oil giant is moving ahead with multi-billion-dollar projects in China, India and Malaysia and aims to finalize new partnerships this year, Abdulaziz Al-Judaimi, Aramco’s senior vice president for downstream, told Reuters.
Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from some 5 million bpd now, and double its petrochemicals production by 2030, he added. Aramco pumps around 10 million bpd of crude oil.
“Our strategy is very simple. We want to be at 8 to 10 million barrels per day of participated (refining) capacity ... (and) we are going forward by trying to be a top leader in chemicals by 2040,” Judaimi said.
“The market that we want to grow in ... has to be growing, a strong market, with good demand and of course these assets have to be integrated to the whole value chain of the downstream,” he said in an interview at Aramco’s headquarters in Dhahran.
To help it reach these targets, Aramco has entered a 50 percent joint venture with three Indian refiners to build a $44 billion, 1.2-million-bpd refinery integrated with petrochemical facilities on India’s west coast.
Aramco has said it may introduce a strategic partner to share its 50 percent stake in the Indian refining venture.
Judaimi said Aramco was working with Abu Dhabi National Oil Co. (ADNOC) toward securing a partnership. It would be the first time for the two national oil companies to join hands in an international venture.
“We are now finalizing the MOU (with ADNOC) that would cover certain commercial principles between us,” he said, adding that the memorandum of understanding would be finalized this year. He said front-end engineering for the project could start by early 2019.
Apart from India, Aramco is also taking a 50 percent stake in Petronas’ huge RAPID project in the southern Malaysian state of Johor.
Aramco hopes this will help it dominate supplies in India and Malaysia, two of the world’s fastest-growing oil markets after China, and where growth potential is bigger than in other, more developed regions. Aramco is eyeing three separate refining and petrochemical projects in China, Judaimi said.
“Asia has to have the lion’s share ... We believe markets east of the Suez Canal will continue to grow, including the Middle East as well,” Judaimi said, adding that the United States is “another market we want to grow in.”
In April, Aramco said it was integrating a petrochemicals business into its subsidiary Motiva, the United States’ biggest oil refinery.
Aramco is strengthening its refining role in China, one of its biggest customers. It has a refinery joint venture with Sinopec and Exxon Mobil and is in talks with CNPC to finalize the purchase of a stake in a 260,000-bpd refinery in Yunnan.
Judaimi said he expects to take a final investment decision on the Yunnan refinery, which is operational, by the end of this year.
“We are in the final stage of negotiations. It’s like building a house — the last touches take much longer.”
Aramco plans to build a 300,000-bpd refinery with China’s Norinco. Judaimi said he expects to finish front-end engineering for the Norinco project by mid-2019, following which the company will take its final investment decision.
Judaimi said Aramco had also started negotiations for a third refinery in China.
“It’s a smart refinery with higher conversion of liquids into chemicals,” he said, declining to give details.
’LAST MAN STANDING’
Aramco has been integrating its refining with petrochemicals to help the company expand its market share and refined products portfolio.
The company is betting on growing demand for fuel in India and Southeast Asia but also shifting more into petrochemicals in case those consumption forecasts prove too optimistic.
“In the long term, we are thinking of investing more into chemicals,” he said.
“We know the world needs chemicals ... as populations grow they need more plastic,” he added.
One centerpiece of Aramco’s push into chemicals is a project it is building at home with Saudi Basic Industries Corp. (SABIC), the world’s fourth-biggest petrochemicals company.
The $20 billion project with SABIC is to build a complex that converts crude oil into chemicals directly, bypassing the refining stage. Judaimi said Aramco would make a final investment decision by the end of 2019.
“This is a very critical program and we are going to do all we can to make it happen,” Judaimi said.
“We believe we are the last man standing in terms of energy supply. Our cost position on the upstream side, our reliability, our location and our infrastructure are all competitive advantages to us.”
Saudi Aramco eyes partnerships as it expands refining, petrochems
Saudi Aramco eyes partnerships as it expands refining, petrochems
- Saudi Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude
- Aramco is expanding its footprint globally by signing downstream deals and boosting the capacity of its plants
Saudi stocks rebalance after Kingdom opens market to global investors
- Foreign access reforms trigger short-term volatility while underlying market fundamentals hold
RIYADH: Saudi Arabia’s stock market experienced a volatile first week following a landmark decision to fully open the market to foreign investors—a move analysts view as essential to funding the Kingdom’s sweeping economic transformation plans.
The Tadawul All Share Index began the week with a sharp decline, falling 1.89 percent on Feb. 1, the same day new regulations eliminating key restrictions on international investment officially came into force. The index rebounded the following session and remained in positive territory for three consecutive days before slipping once more, ultimately ending the week down 1.34 percent.
Ownership data from Tadawul as of Feb. 1 indicated that foreign non-strategic investors reduced their holdings in nearly half of the companies listed on the TASI. An analysis conducted by Al-Eqtisadiah’s Financial Analysis Unit showed that foreign ownership declined in 120 firms, increased in 97 others, and remained unchanged across the remainder. Despite these shifts, the total number of shares held by foreign investors showed no overall change.
Speaking to Arab News, economist Talat Hafiz addressed the initial volatility in the TASI, explaining: “Stock markets in the Kingdom and globally naturally experience fluctuations driven by profit-taking and price corrections.”
He added that the index’s decline and subsequent recovery “appears to be primarily the result of technical and sentiment-related factors rather than a direct reaction to the opening of the market to foreign investors.”
Hafiz emphasized that this was particularly evident given that foreign participation in the Saudi market is not entirely new, having previously existed under alternative regulatory structures.
The market turbulence coincided with sweeping reforms enacted by the Capital Market Authority and announced in January. These measures included the removal of the restrictive Qualified Foreign Investor framework, which had imposed a $500 million minimum asset requirement, as well as the elimination of swap agreements. The reforms aim to attract billions of dollars in fresh investment while improving overall market liquidity.
Hafiz noted that an initial surge of foreign capital was widely expected to generate short-term volatility as portfolios were rebalanced and liquidity dynamics adjusted. However, the rapid recovery of the index suggests that the market’s underlying fundamentals remained strong and that investor confidence was not significantly undermined.
Earlier in January, experts had told Arab News that the reforms could unlock as much as $10 billion in new foreign inflows. Tony Hallside, CEO of STP Partners, described the move as a pivotal evolution, signaling that the Kingdom is committed to building the most accessible, liquid, and globally integrated financial markets in the region.
Hafiz reinforced this optimistic outlook, stating that broader market access is likely to yield positive effects by boosting liquidity, widening participation, and supporting overall market recovery—ultimately contributing to greater long-term stability once near-term adjustments ease.
He said: “TASI’s swift rebound reflects the market’s constructive response to increased openness and deeper investor participation.”
Hafiz said he does not believe the market opening is primarily intended to function as a conventional financing channel. Instead, he argued that its broader objective lies in the internationalization of the Saudi market, a goal underscored by its inclusion in major global indices.
He explained that attracting foreign capital should be understood less as a short-term funding solution and more as a structural reform aimed at strengthening market depth, efficiency, transparency, and global integration.
The Saudi economist added that while increased foreign participation can indirectly support Vision 2030 by enhancing liquidity and reducing the cost of capital, the opening of the market is “not designed as a direct mechanism to revive or fast-track projects that may have faced funding constraints.”
Rather, it creates a more resilient, globally connected financial ecosystem that can sustainably support long-term development ambitions, according to Hafiz.
As the market continues to stabilize, investors and observers are monitoring which sectors are expected to attract the largest share of investment in the coming weeks and months.
Hafiz told Arab News that foreign investment is expected to initially focus on companies operating in strategically significant, high-growth sectors such as healthcare, transportation, and technology, in addition to mining, energy, and telecommunications.
He added that experienced foreign investors are likely to gravitate toward firms demonstrating strong financial disclosure practices, sound corporate governance, adherence to environmental, social and governance standards, and a track record of consistent dividend payouts.
