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Premier Jason Kenney, seen here in Ottawa on Dec. 9, 2019, has long been critical of Saudi Arabia.

BLAIR GABLE/Reuters

Alberta is in talks with a private Saudi Arabian company to open a $5-billion petrochemical facility in the province, according to the associate minister of natural gas.

Premier Jason Kenney has long been critical of Saudi Arabia, repeatedly calling it an unfriendly dictatorship with a state-owned energy company that has no right to dump its oil on North America. Even so, associate minister Dale Nally told The Globe and Mail that petrochemical companies in the country are “looking at other jurisdictions” in which to expand – “and one of those jurisdictions is Alberta.”

“A state-owned company producing oil in a Middle East dictatorship is far different from a company from the Middle East that comes to Alberta and adheres to our environmental regulations and adheres to our rule of law and treats everybody equally,” Mr. Nally said Thursday.

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Saudi Arabia has a thriving petrochemical industry that has expanded markedly over the past 20 years, driven in part by government incentives. In 2017, for example, one of the country’s largest petrochemical producers, Saudi Basic Industries Corp. (Sabic), signed a deal with state-owned oil producer Saudi Aramco to build a US$20-billion facility in the kingdom with an opening date of 2025. This year, Saudi Aramco bought a 70-per-cent stake in Sabic.

Mr. Nally would not name the company in talks with the province, but his office confirmed it is not a state-owned entity. He also would not specify where the facility could be built but said it would be worth between $5-billion and $10-billion and would take more than five years to build.

Despite pandemic-fuelled economic uncertainty that has companies across the globe cutting expenses to protect their balance sheets, Mr. Nally said his department has spoken with several international petrochemical producers eyeing Alberta.

Alberta is using its various trade offices around the world to make the case for building in the province, and on Friday the government will launch its new petrochemical incentive program to sweeten the deal for investors.

The program is open to small, medium and large petrochemical projects and will see companies receive grants worth 12 per cent of their eligible capital costs once their facilities are up and running. The application window for small projects – between $50-million and $150-million – will be open for five years; larger projects like the Saudi proposal will have 10 years to apply.

The program will also be available for new hydrogen production facilities that incorporate carbon capture into their design to reduce greenhouse gas emissions.

Mr. Nally said extending the program to hydrogen producers makes sense because, much like the petrochemical industry, the sector uses natural gas as a feedstock to create the fuel. With the sector projected to grow to $2.5-trillion globally by 2050, he said, the new program will help Alberta maintain its position as a leader in hydrogen production.

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Mr. Nally said the program is self-funded and that no cash will be released to any company until its project is complete.

“If you consider that some of these facilities will require between 5,000 and 7,000 full-time construction jobs, the tax revenue alone on those jobs will more than pay for the grant that is awarded. So from that perspective, there’s little risk to the taxpayer," he said.

“It’s going to bring long-term investment. That’s what this program is about – it’s about economic recovery.”

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