Sumitomo considers aromatics at Rabigh

07 June 2004 00:01  [Source: ACN]

SUMITOMO Chemical will consider producing aromatics at its proposed ethane-based 1.3m tonne/year petrochemical complex in Rabigh, Saudi Arabia, said a company spokesman.

The spokesman said aromatics production would be included in a joint feasibility study with Saudi Aramco to be completed at end-2005. This was not mentioned in an announcement made last month. ACN’s sister agency, CNI, reported that the study would consider the production of two linear-low-density polyethylene (lldPE) units with a total capacity of 750 000-900 000 tonne/year, two polypropylene (PP) units with a total capacity of 700 000 tonne/year, a propylene oxide unit or other propylene derivative units and other ethylene conversion units such as monoethylene glycol (MEG) and alpha-olefins.

The Middle East has been focused on producing low-cost ethylene derivatives, but there have been few recent aromatics investments except for Jubail Chevron Phillips’ and Sadaf’s styrene projects in Saudi Arabia, and the No 3 and No 4 Aromatics projects by National Petrochemical Co in Iran.

The proposed Rabigh complex is to be built next to Saudi Aramco’s refinery, which the Saudi major had considered upgrading many years ago.

The spokesman also dismissed market speculation that a metathesis project by Petrochemical Corp of Singapore (PCS) would be cancelled if Sumitomo went ahead with the Rabigh project, which is expected to produce 900 000 tonne/year of propylene from a fluid catalytic cracking unit. Sumitomo leads a Japanese consortium that owns 50% of PCS.

PCS is in the advanced stage of evaluating a metathesis project for producing up to 200 000 tonne/year of propylene, to be consumed by an affiliate, The Polyolefins Co (TPC). TPC plans to convert its 150 000 tonne/year low linear-density polyethylene (lldPE) unit into a 200 000 tonne/year polypropylene (PP) copolymer and terpolymer facility.

The metathesis project was different from the Singapore or Rabigh cracker projects, the spokesman said. ‘We would like to pursue the metathesis project as soon as possible if a decision is made to go ahead with it. It would not be reasonable to wait for propylene to be available in Rabigh only in 2008 when the complex is ready,’ he said. ACN understands that the metathesis project is expected to be ready in 2005-06.

The spokesman also revealed that there a third investor could participate in the Rabigh project. He could not say whether the potential partner would invest in the complex or only in the derivatives.

He added that Sumitomo could not proceed with the Singapore cracker project until it had completed the feasibility study on Rabigh. There was speculation on whether Sumitomo would give up the 1m tonne/year project in Singapore completely or choose to invest at a later stage. The Singapore project has been proposed as the third cracker of PCS, of which Shell Chemicals is the other 50% shareholder.

Industry observers said Sumitomo was likely to give priority to the Rabigh project, as it was cheaper to build. Investors did not need to add much kit to the back-end of the ethane cracker, for instance butadiene-extraction and aromatics to absorb the pygas.

‘When as much as 25% production can be co-products, you cannot dump the crude C4s, pygas, etc, into the market without adding value. For a 1m tonne/year ethane cracker, you might produce say, a few thousand tonne a year of propylene and pygas, so you would not disrupt your core markets by just selling these products unprocessed or at market prices,’ one observer said.

Therefore, Sumitomo could face much higher capital costs in building a cracker in Singapore, compared with that in Rabigh. The observers also added that the Rabigh project would give Sumitomo better bargaining power when negotiating with Shell, which has appeared keener than before on going ahead with the Singapore project.

Shell is hoping that the cracker project would help it achieve integration benefits with its refinery in Pulau Bukom. The company said it maintained its interest in the project, but could not say when it would proceed to the definition stage of its feasibility study.

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