We continuously explore and evaluate opportunities, whether grass roots or participatory, to grow our refining and chemicals portfolio.
Our partnerships in refining and marketing ventures in China, Japan, South Korea and the United States enable us to traverse the length of the value chain from wellhead to consumer, adding value to our resources at every step.
Saudi Arabia, through Saudi Aramco, is the number one crude oil supplier to six major Asian countries — China, Japan, South Korea, Taiwan, the Philippines and India — but our relationship with the region goes far beyond the reliable supply of petroleum energy to include research alliances, materials supply, education, engineering and technical services, training and other mutually beneficial endeavors.
In the downstream sector, we participate in integrated refining, chemicals, marketing, and distribution companies in China, Japan and South Korea.
In China, our crude oil exports account for nearly 10% of the country’s demand. Our portfolio of downstream assets in China is designed to benefit energy and feedstock consumers and maximize returns on the Kingdom’s hydrocarbon resources. In the Fujian Province, we have an equity ownership in a joint venture called the Fujian Refining and Petrochemical Company Limited (FREP).
FREP is our joint venture with ExxonMobil, China Petroleum and Petrochemical Company Limited (Sinopec) and the Fujian provincial government. It is a key element in our Asia chemicals strategy and is long recognized for its outstanding environmental performance by the local community and government.
Our investment in South Korea’s S-OIL, one of the country’s leading refiners, complements our downstream ventures in China and Japan and creates new opportunities along the value chain in the major energy markets in Asia.
In 2015, the S-OIL Board approved the funding for a project to upgrade facilities to improve the competitiveness of its fuels business and to promote further petrochemicals integration by expanding its olefins production.
In November 2015, we signed a Heads of Agreement with PT Pertamina, the national oil company of Indonesia, to formalize key business principles for the joint ownership, operation, and upgrade of the Cilacap Refinery located in Central Java, Indonesia. The proposed upgrade will allow the refinery to process more sour crude oils, meet high-quality product specifications, and produce basic petrochemicals and lubricant base oils. The basic engineering design study for the refinery upgrade is expected to be completed in 2016.
Ventures such as these form an essential part of our approach to cultivate downstream opportunities in Asia, an area we believe will provide long-lasting prospects for investment, collaboration and technology development to meet the growing energy needs in the region.
In the United States, where we are the number two supplier of crude oil, we continue to upgrade equipment and improve operating efficiencies at the Motiva Refinery in Port Arthur, Texas, the largest refinery in the U.S. The refinery is operated by Motiva Enterprises, a refining and marketing joint venture between our Houston based subsidiary, Saudi Refining Inc., and an affiliate of Shell Oil.
Motiva’s high-quality fuels are marketed under the Shell brand through roughly 8,300 retail stations to millions of consumers in the eastern, southern and Gulf coast regions of the U.S.
In April 2016 we marked a significant milestone in our journey to become a globally integrated energy and chemicals company when our European subsidiary, Aramco Overseas Company, and LANXESS, a German specialty chemicals company, successfully launched their 50-50 joint venture company, ARLANXEO.
The joint venture will develop, produce, market, sell and distribute performance polymers used by global tire and auto parts manufacturers, and in the construction and life science industries.
The joint venture will study global growth prospects, including potential opportunities in the Kingdom, further promoting economic diversification and creating high-skill, high-value manufacturing jobs. The research programs undertaken by the joint venture, such as the development of energy saving tires, complements our own research into fuel efficient engines.
Saudi Aramco brings resources to continue investing in new technology while LANXESS will contribute to the joint venture its existing global synthetic rubber and elastomers business units, 20 production sites, and four research centers in nine countries across Europe, Asia and the Americas.