Saudi Aramco, Air Products, and ACWA Power have formed a huge joint venture (JV) to buy billions of dollars of unbuilt energy assets in the Kingdom of Saudi Arabia.
State-owned oil giant Saudi Aramco, US gas firm Air Products, and Riyadh-headquartered ACWA Power signed a term sheet outlining details for establishing a gasification and power JV.
The new entity will be located in Jazan Economic City (JEC), Saudi Arabia, and will purchase gasification assets, power block, and associated utilities from Aramco for a fee of approximately $8bn (SAR30bn).
All of these gas and power assets are currently under construction, but will be handed over to the JV, which is scheduled to start operations in 2019.
This tripartite agreement will bolster Saudi Aramco's Jazan Refinery megaproject in JEC. This project will process heavy and medium crude oil to make liquefied petroleum gas, sulfur, asphalt, benzene, and paraxylene. It could add up to 400,000 barrels per day of refining capacity.
The facility will be operated by the JV under a 25-year contract for a fixed monthly fee. Aramco said it would supply the feedstock, while the JV will produce power, hydrogen, and other utilities for the oil giant.
Pennsylvania-headquartered Air Products has a 55% stake in the entity, with Saudi Aramco and Acwa Power holding the balance.
Senior vice president of downstream at Saudi Aramco, Abdulaziz Al-Judaimi, hailed the gas and power unit, describing it as "central to the self-sufficiency of our megaprojects at Jazan".
Al-Judaimi said the JV could increase the value of the refinery and combined cycle power plant, opening up new opportunities for foreign investment and private sector participation.
ACWA Power chairman, Mohammad Abunayyan, said he was "committed" to increasing the use of PPPs in the energy market.
"ACWA Power plays an important role in the power sector in the kingdom, and welcomes the opportunity to assist in the further development of the Jazan economic corridor. Furthermore, our collaboration with industry-leading companies, Saudi Aramco and Air Products, will stimulate growth and innovation, aligned with Saudi Vision 2030."
The agreement grows the scope of Air Products' work in JEC, as it is already working on an air separation unit at the site.
Air Products chairman, president, and chief executive officer, Seifi Ghasemi, said the agreement was an "outstanding opportunity to expand involvement in the megaproject".
Last year, the company acquired patents for Shell liquids gasification technology, which is the primary technology used at the JEC gas plant.