Sumitomo-Saudi Aramco Venture faces a cost run of US$ 1 billion

14-May-05

Sumitomo Chemical and Saudi Aramco agreed in May 2004 to evenly split an initial investment of the US$4.3 billion in the project, under which they will acquire a large Red Sea refinery and refine ethane gas to produce such petrochemical products as ethylene and propylene by 2008. Rising material prices have spiked up the total investment costs in the oil refinery and petrochemical plant project of Sumitomo Chemical Co. and Saudi Arabian Oil Co. (Saudi Aramco). The investment cost is expected to increase by over US$1 billion over their original estimate. Cash reserves and additional borrowing will be used to cover the cost blowout.