Saudi Delegation Culminates U.S. Tour with Return to Oil Roots

By Erin Ailworth 

HOUSTON -- After courting Hollywood and Silicon Valley, a Saudi delegation led by Crown Prince Mohammed bin Salman capped a nearly three-week American tour on Saturday by touting potential petrochemical investments totaling billions of dollars along the U.S. Gulf Coast.

The plans for investment by Saudi Arabian Oil Co., known as Aramco, and Saudi Basic Industries Corp., known as Sabic, weren't final, and not wholly unexpected. But they underscored that the kingdom is looking to capitalize on the bounty of fossil fuels being unlocked by shale drilling to cheaply make plastics and other byproducts in the U.S.

A wave of companies including DowDuPont Inc., Exxon Mobil Corp. and Royal Dutch Shell PLC are investing in plants along the U.S. Gulf Coast in what has become a massive petrochemical boom.

On Saturday, Aramco's Motiva Enterprises LLC announced memorandums of understanding with Honeywell International Inc. and TechnipFMC PLC to explore potential petrochemical facilities that, if built, would represent multibillion-dollar investments.

Sabic meanwhile said it was close to making a final investment decision on whether to build a large petrochemical facility with Exxon near Corpus Christi.

"We appreciate the generations of American men and women who helped to build Aramco over many decades and made a lasting contribution," said Saudi Energy Minister Khalid Al-Falih, as the crown prince sat nearby.

The Saudi announcements on Saturday were a return to basics for the country's leaders following a whirlwind tour of America during which they met with an array of corporate titans and political leaders as they sought to diversify the kingdom's business interests and present it as more than an oil power.

As part of his economic modernization plan, Prince Mohammed is also trying to change the view of Saudi Arabia as a strict Islamic kingdom to one that is more tolerant, socially liberal and respectful of women.

The prince has met top business executives including Amazon.com Inc.'s Jeff Bezos, Microsoft Corp.'s Satya Nadella and Walt Disney Co.'s Robert Iger, as he seeks to reshape a Saudi-U.S. business relationship long based on oil sales and military contracts.

He has lobbied American tech and entertainment leaders to bring everything from data centers to cinemas to Saudi Arabia, part of his push to transform the country into a more open society, one less dependent on oil.

But the Texas finale over the weekend demonstrated that the country's core relationship with the U.S. for now is still founded on fossil fuels. Among those in attendance at the Houston-area events was President Donald Trump's energy secretary, Rick Perry.

At an event Saturday in Katy, Texas, outside of Houston, Sabic announced it is assessing plans for an Americas region head office in the greater Houston area.

Sabic Chief Executive Yousef Al-Benyan also said his company hopes to make a final investment decision on whether to build the petrochemical plant with Exxon by the end of June.

"The revolution of shale gas has really changed our view," he said in an interview. "We recognize North America as really a hub for our growth strategy."

Aramco said Motiva would likely make a final decision on whether to proceed with its new U.S. petrochemical investments next year.

(END) Dow Jones Newswires

April 07, 2018 21:24 ET (01:24 GMT)

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