Saudi Aramco is said to pauses domestic chemicals projects amid oil price pressures

[Aramco office in Houston, Texas, USA.]
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Saudi Aramco (ARMCO [https://seekingalpha.com/symbol/ARMCO]) suspended work on three major petrochemicals expansions as lower crude prices strain finances and shift the company’s focus toward overseas ventures, Bloomberg News reported Thursday, citing people familiar with the matter.

The state-controlled energy giant has delayed moving forward with engineering and design phases for the facilities, the sources said, noting the decision is meant to stagger spending at a time when budget pressures are mounting. Aramco (ARMCO [https://seekingalpha.com/symbol/ARMCO]) declined to comment to Bloomberg News.

The move underscores a broader slowdown in Saudi Arabia’s long-term development plans as softer oil prices and costly domestic investment programs stretch government and corporate finances. Aramco (ARMCO [https://seekingalpha.com/symbol/ARMCO]), which slipped back into a net-debt position last year, has been borrowing more heavily to maintain spending.

Brent crude prices have fallen roughly 12% this year to below $66 a barrel, well under the $94 that Bloomberg Economics estimates Riyadh needs to balance its budget. The slump has also weighed on Aramco’s (ARMCO [https://seekingalpha.com/symbol/ARMCO]) earnings, with the company posting 10 consecutive quarters of profit declines.

The postponed projects include two joint ventures in Yanbu on the Red Sea and another plant in Jubail on the Persian Gulf. Aramco (ARMCO [https://seekingalpha.com/symbol/ARMCO]) already abandoned a separate crude-to-chemicals project with SABIC at Ras Al Khair.

Instead, the company is prioritizing investment abroad, advancing petrochemical ventures in China and South Korea where demand growth is strongest. These efforts support Aramco’s (ARMCO [https://seekingalpha.com/symbol/ARMCO]) long-term goal of converting as much as 4 million barrels a day of crude into chemical products, even as transportation fuel demand is expected to plateau with the global energy transition.

At home, the company is continuing to fund upstream developments such as the Jafurah gas field, scheduled to begin initial production later this year. Aramco (ARMCO [https://seekingalpha.com/symbol/ARMCO]) has outlined more than $50 billion in spending for 2025, with the bulk directed toward natural gas and oil capacity maintenance.

Ongoing international projects include two crude-to-chemicals complexes in China, one in South Korea, and a joint venture with TotalEnergies (TE [https://seekingalpha.com/symbol/TE]) in Saudi Arabia, all slated to come online within three years.

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