Saudi Aramco and Sumitomo Chemical sign joint venture agreement

08-02-2005: The Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo Chemical) signed an agreement to become joint venture partners in the development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh, on the Kingdom's west coast.

The joint venture agreement follows the successful completion of a joint feasibility study, during which both companies performed front end engineering design and verified the viability of the project. The joint feasibility study began on May 9, 2004, when Saudi Aramco and Sumitomo Chemical signed a memorandum of understanding to launch the effort.

The project has moved to an early phase of execution with the recent award of multiple engineering, procurement and construction (EPC) contracts. When completed in late 2008, the Rabigh Project will be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.4 million tons of petrochemical solids and liquids, along with large volumes of gasoline and other refined products, will be produced. Also, this project has created third-party investment opportunities in Saudi Arabia's private sector for utilities and other related infrastructure.

For Saudi Aramco and Sumitomo Chemical, the project represents an opportunity for the world's largest producer of hydrocarbons to partner with a leading world-class petrochemical producer.

It presents an opportunity for increased industrialization in Saudi Arabia and a platform for broad downstream conversion industry development in the Kingdom. This Project represents a concrete example of the Kingdom's strategy of attracting foreign investment to expand its economy and provide increased job opportunities for Saudi nationals. It is also consistent with the objective of creating opportunities for private local investment in service and other related industries.

Through this joint venture, Sumitomo Chemical, a major producer of polyolefins, will secure a reliable and stable supply of feedstock to strengthen its medium- and long-term competitiveness. This project constitutes an important step forward in enhancing the global competitiveness of the company's petrochemical operations. Although Sumitomo Chemical has been operating a large-scale complex in a petroleum-refining center, Singapore, since 1984, the Rabigh project is the company's first step to establish a foothold in an oil and gas-producing country, thereby assuring stable feedstock supply for its operations. The project will, therefore, open a new stage in Sumitomo Chemical's worldwide business strategy.