Sumitomo Chemical Company (Sumitomo), one of Japan's leading chemical companies and a member of the diversified Sumitomo Group, and Saudi Arabian Oil Company (Saudi Aramco) have agreed to go ahead with the proposed expansion of the Rabigh petrochemical complex on the western coast of Saudi Arabia.

Both the companies have been equal partners in the Rabigh Refining & Petrochemical Company (Petro Rabigh) for the construction and operation of an integrated refinery and petrochemical complex known as Rabigh-I since 2005.

''Our long standing partnership with Sumitomo Chemical continues to make further inroads with Rabigh-II representing a significant milestone in Saudi Aramco's downstream portfolio expansion and diversification strategy,'' said Khalid A. Al-Falih, president and chief executive officer of Saudi Aramco.

The new plan envisages setting up the Rabigh-II project based on the feasibility studies, by moving ahead with the finalisation of various project components including engineering, procurement and construction (EPC) and other project contracts as well as project financing, Sumitomo said in a statement.

Petro Rabigh will serve as the project company for the Rabigh-II project. The total project cost is estimated at approximately $7 billion.

The new project includes expansion of ethane cracker unit and construction of a new aromatics complex which will use additional 30 million cubic feet per day of ethane and around 3 million tonnes per year of naphtha as feedstock to produce a variety of petrochemical products.

The plant is expected to go on stream in the first half of 2016. On completion of the expansion project, Rabigh will be one of the world's largest refinery complexes.

Petro Rabigh is owned 37.5 per cent each by Sumitomo and Saudi Aramco and the remaining 25 per cent is free float. Its shares are listed on the Saudi Stock Exchange. Petro Rabigh's sales reached $14 billion in 2011.

Rabigh-I operates a 400,000-barrels per day refinery complex producing naphtha, kerosene, gasoline, diesel and fuel oil. The refinery uses ethane from natural gas which is several times cheaper compared to conventional naphtha, to produce ethylene, the basic raw material for making petrochemicals.

The main products from the Rabigh-II project will be ethylene propylene rubber, thermoplastic polyolefin, methyl methacrylate monomer, polymethyl methacrylate, low density polyethylene, benzene, acetone etc.

The company will also explore the possibility of producing other specialty chemicals: acrylic acid, superabsorbent polymer, and synthetic polymers such as caprolactam, nylon-6 etc with the involvement of a third party.

Dhahran-based Saudi Aramco is the national oil company of Saudi Arabia and is considered to be the world's most valuable company, managing the world's largest proven crude oil reserves of 260 billion and the world's fourth largest gas reserves with 279 trillion cubic feet. The company's annual revenue is around $210 billion.

In line with the government's strategy, Aramco is progressing with the Rabigh expansion project as part of its diversification plans and to maximise profits from downstream operations.

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