Petro Rabigh phase 2 and Aramco’s ambition

By Malini Hariharan

Petro Rabigh, the Saudi Aramco and Sumitomo Chemical joint venture, has moved to the next round of its ambitious phase 2 expansion which includes a new aromatics facility and a number of value-added derivatives.

Construction tenders for seven packages have been issued and bidding is due to close on 1 October. Tenders for three more packages have yet to be issued.

A final investment decision will be made by the end of this year and contracts are likely to be awarded early next year.

Completion of the project, estimated to cost $6-8bn, is expected in Q1 2015.

The project involves expanding the 1.3m tonnes/year cracker by 300,000 tonnes/year, thanks to an additional 30m scf/day ethane allocation from Saudi Aramco. The aromatics complex, based on 3m tonnes/year of naphtha, will house a paraxylene (PX) plant of 800,000-850,000 tonnes/year and a benzene unit with a capacity of 200,000-400,000 tonnes/year.

Derviative units listed in a memorandum of understanding signed in 2009 included MMA, PMMA, low density polyethylene (LDPE), ethylene vinyl acetate (EVA), caprolactam, polyols, cumene, phenol, acrylic acid, superabsorbent polymers (SAP) and nylon 6. It is not yet clear if Petro Rabigh will pursue all these projects given questions about the viability of downstream investments in the Kingdom.

Meanwhile, Aramco remains focused on expanding its petrochemical reach through Petro Rabigh and its other planned projects with Dow Chemical and Total.

In a speech yesterday, the company’s senior vice president of finance, highlighted the economic potential of the Dow joint venture which is expected to enter approval stage in July.

The project is expected to create about 3,000 value-adding direct-hire jobs at the facility, with an equal number of direct jobs likely to be created in the chemicals and plastics value parks associated with the venture, he said.

This is what the Saudi government is looking for as it is under pressure to generate employment opportunities for the country’s rapidly growing population. The Saudi labour force is projected to hit 10m by 2030, more than double the number in 2009.

Unemployment is running high at around 10.5%. The number of unemployed Saudis is currently estimated at 500,000 as against 416,000 in 2008.

Aramco’s grand vision is to rapidly climb the chemical ranking charts.

“Within the next decade, we aim to launch into the top tiers of the global chemicals business,” said.

Investments in new projects are a step in the right direction but a few acquisitions will certainly help achieve this goal faster.

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