Saudi Aramco and Japan’s Sumitomo Chemical plan to go ahead with a 5.6 billion euro expansion of a petrochemical project in Saudi Arabia.
The announcement ended previous doubts over the future of the delayed development.
The project, is due to start operations in early 2016, when the partners expect the market to pull out of a recent slump with demand improving in China and Europe.
The plastics industry has faced slowing demand as car sales ease in large emerging markets such as India.
At the same time higher raw material costs on the back of rising oil prices have pulled down profits.
In Saudi Arabia, the price of ethane, a raw material used for building plastics, is lower than international prices, providing cheap fuel for petrochemical plants.
For state-run Saudi Aramco, it is a steady revenue source, and part of its plan to expand its petrochemicals industry and diversify its energy portfolio and boost earnings from downstream activities.