Can Saudi Aramco’s Petrochemical Bet Survive a Glutted Market?

Aramco’s Petrochemical Push: Boom or Bust?

Saudi Aramco just dropped a bombshell: They’re spending like crazy on petrochemicals—up 33% this year to $51 billion (191.3B SAR). From Korea’s Shaheen project to China’s Hapco megacomplex, they’re doubling down on turning oil into chemicals. But here’s the twist: Their own subsidiary SABIC lost $10.8B (40.7B SAR) last quarter. So… what’s the real deal?

1. The "Oil-to-Chemicals" Obsession
Aramco’s betting big on COTC (Crude-to-Chemicals), aiming to convert 4M barrels/day of oil directly into plastics/chemicals by 2030. Their logic?

"Oil demand will fade, but plastics? Never."

China/Korea partnerships lock in Asian market dominance.

Cheap Saudi gas = unbeatable ethylene/PE margins.

But critics whisper: "Dude, the world’s already drowning in plastic!" With SABIC bleeding cash from oversupply, is Aramco ignoring the warning signs?

2. Health & Environmental Red Flags
More crackers = more ethylene oxide (carcinogen), benzene (leukemia risk), and CO₂ emissions. Key concerns:

China’s Hapco project sits near Bohai Bay—already a pollution hotspot.

Saudi’s Amiral expansion could spike PM2.5 levels in Jubail.

Microplastics backlash: If ESG rules tighten, Aramco’s plastic dreams could crash.

3. Trade Wars & Geopolitics
Aramco’s playing 4D chess with global trade:

Korea’s Shaheen complex = backdoor into EV battery materials (think propylene for lithium-ion separators).

China investments hedge against U.S. sanctions.

But… If Europe slaps carbon taxes on Saudi polypropylene, profits could vanish.

As the world grapples with oversupply in petrochemicals and sluggish demand, Saudi Aramco is doubling down on massive refining and chemical projects—from South Korea to China and Saudi Arabia. But with SABIC’s widening losses and global margins under pressure, can Aramco’s $51 billion (191.3 billion SAR) petrochemical push still pay off?

​​Latest Developments & Strategic Moves​​
Aramco’s H1 2025 earnings reveal a ​​33.1% surge in petrochemical spending​​, driven by three mega-projects:

​​Shaheen Project (South Korea)​​: 75% complete, set to process ​​crude-to-chemicals (COTC) at record efficiency​​, producing ​​ethylene, propylene, and aromatics​​ for Asia’s plastics market.
​​Hapco Complex (China)​​: 70% finished, integrating ​​refining and chemical production​​ to supply China’s automotive and packaging sectors.
​​Amiral Expansion (Saudi Arabia)​​: A $11B expansion at SATORP, boosting ​​polyethylene and glycols​​ output for global exports.
Despite ​​SABIC’s Q2 net loss widening to 40.7B SAR​​, Aramco remains committed to its ​​2030 goal of converting 4M barrels/day of oil into chemicals​​, betting on long-term demand for plastics and synthetic materials.

​​Real-World Impact & Future Scenarios​​
​​For Consumers​​: More ​​cost-effective plastics​​ for packaging, textiles, and EV components.
​​For Energy Transition​​: Aramco’s COTC strategy could ​​lower emissions per barrel​​ by maximizing chemical yield—potentially making oil-based materials more sustainable.
​​For Markets​​: If demand rebounds post-2026, Aramco’s early investments could dominate ​​Asia’s petrochemical supply chain​​.

Saudi Aramco’s aggressive push into petrochemicals—backed by its $100+ billion investment strategy—aims to diversify beyond crude oil and capitalize on rising global demand for plastics and specialty chemicals. However, the move carries risks as markets face potential oversupply, with global ethylene capacity expected to grow 30% by 2027, outpacing demand.

Aramco’s advantages include low-cost feedstock from its vast oil reserves and strategic partnerships (e.g., SABIC integration). Yet, a prolonged petrochemical glut could pressure margins, especially if recycling trends or regional competitors like China undercut pricing. The company’s long-term bet hinges on leveraging scale and vertical integration to withstand cyclical downturns while positioning for Asia’s growing consumption. Success will depend on balancing capacity expansion with market flexibility—avoiding the pitfalls of overreliance on a single sector, as seen in past oil shocks.