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Aramco Taps TechnipFMC & Honeywell for Petrochemical Foray

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TechnipFMC plc (FTI - Free Report) and Honeywell UOP, a subsidiary of Honeywell International Inc. (HON - Free Report) , recently signed memorandums of understanding (MOUs) with Motiva Enterprises, an American unit of Saudi Aramco. The deals, which are expected to enable the Saudi Arabian state-run oil company to unite its petrochemicals business with oil refining, are valued at $8-$10 billion.

The move is expected to help Motiva examine petrochemical production technology, which can be used in a chemical plant to be built at its Port Arthur, TX site. The deal marks the latest trend of oil companies to focus on petrochemical business in order to diversify their portfolio. Additionally, Motiva was planning to ramp up its Port Arthur refinery’s capacity from 603,000 barrel per day (BPD) to 1-1.5 million BPD.

London-based TechnipFMC will provide Motiva with its technology of mixed-feed ethylene production in the United States. The technology leader, TechnipFMC's knowledge is expected to help Motiva produce two million tons of ethylene per annum, which is a crucial component of making plastics. TechnipFMC was roped into the deal, which is in line with Saudi Aramco's plan of investing $18 billion in its subsidiary Motiva, in order to expand the Port Arthur facility and sway into petrochemical production.

Meanwhile, Honeywell UOP's aromatics unit will provide Motiva with the technology of converting by-products of the production of gasoline, benzene and paraxylene into two million tons of feedstock per year, for plastics and chemicals.

The final investment plan for the project — expected sometime next year — is subject to regulatory and competitive conditions.

Zacks Rank and Stocks to Consider

Oil-field service provider, TechnipFMC, and diversified technology and manufacturing companyHoneywell, both carry a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are CNOOC Limited (CEO - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 51.3% year over year, while its bottom line is expected to increase 80.8%.

Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are estimated to soar 55.7% from the year-ago quarter’s figure. For 2018, the bottom line is likely to be up 370.6%.

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