Saudi Aramco’s decision to move its biggest ever project to Jubail from Ras Tanura will see the company scrap an $8bn refinery development and make major changes to schemes worth an additional $17bn.

Sources close to the energy giant tell MEED that the company’s joint venture $17bn-plus petrochemicals project with the US’ Dow Chemical is to be moved to the nearby Jubail Industrial City on Gulf coast. It was originally meant to be built at Ras Tanura, but MEED reported in March that the partners were planning a location change for the scheme because of issues related to the site (MEED 16:3:10).

The decision to move the development has caused Aramco to cancel an $8bn refinery expansion at Ras Tanura, partially integrate its joint venture $10bn new refinery project with France’s Total at Jubail into the scheme, and rework the scope of the $7bn Jizan refinery project it is managing for the government.

Dow and Aramco are also planning a huge change to the scope of the petrochemicals complex as a result of the move. It will now be fed entirely by ethane gas rather than a mix of gas and the petroleum product naphtha as was originally planned. The ethane will be provided by the Saudi Aramco Total Refining and Petrochemicals Company (Satorp) Jubail export refinery project, for which construction contracts were awarded in 2009.

Upon completion, the original Aramco/Dow complex at Ras Tanura was projected to produce 8 million tonnes a year of petrochemicals and gasoline products. Feed studies for the reworked complex are due for completion by the end of the year, and engineering, procurement and construction (EPC) contracts could be tendered in 2011. The volume of output from the plant will be little altered by the scope change but the diversity of products will be significantly reduced, sources say.

The petrochemicals complex will take up much of the land at the second phase of Jubail Industrial City, where the Satorp refinery is being built. The location change will allow cost savings of up to 40 per cent as the Royal Commission for Jubail and Yanbu will provide the basic infrastructure needed for the project including utilities such as power and water, sources close to the project say.

The decision to move the project, which the partners have told engineering firms and financiers will be announced in mid-May, will have a major impact on several other downstream schemes Aramco is developing.

The company had planned to build a 400,000 barrel a day (b/d) expansion to its existing 500,000 b/d Ras Tanura refining complex to be integrated directly into the petrochemicals complex as part of the development. It was budgeted to cost an additional $8bn.

The move to Jubail will see the petrochemicals complex become a standalone project rather than a fully integrated refinery and petrochemicals development, one engineering executive tells MEED. This means that the Ras Tanura refinery expansion has been scrapped, senior sources who were previously working on the scheme tell MEED.

The Ras Tanura refinery expansion was also due to provide gasoline to the kingdom’s western provinces, and this shortfall will be made up by another Aramco refinery project at Jizan which has also undergone a scope change.

The estimated $7bn Jizan refinery was originally planned to be built as a public-private partnership between the kingdom’s Petroleum & Mineral Resources Ministry and a foreign investor. However, Aramco took over management of the development in February after only two consortiums submitted proposals for the project in a 7 November bid round (MEED 9:2:2010).

Aramco has decided to break the refinery down into two phases. The first part of the development will be a simple hydroskimming refinery which can be built quickly and will provide necessary basic fuel products, an advisor on the project tells MEED.

The energy giant plans to tender a front end engineering and design (Feed) contract for the project either late in the second quarter or early in the third quarter of the year. It wants to tender EPC deals to build it in 2011.

More complex units such as a hydrocracker that produces more saleable gasoline products will be added during a second phase of the project which is likely to be launched in 2011.