Aramco considers location change for Ras Tanura petrochemicals scheme

18 March 2010

Saudi Aramco and Dow Chemical are developing the $17bn scheme

State energy giant Saudi Aramco is considering plans to change the location of one of the region’s biggest projects, the $17bn petrochemicals complex at the Gulf port of Ras Tanura, sources close to the scheme tell MEED.

The development, known as the Ras Tanura Integrated Petrochemicals project, is a joint venture of Aramco and the US’ Dow Chemical. It is currently in the planning phase, with a number of international contractors working on front end engineering and design (Feed) studies. The project is estimated to be worth more than $17bn and would mark the largest single investment to be made by a foreign company in the kingdom.

Upon completion, the complex is projected to produce 8 million tonnes a year of petrochemicals and gasoline products. Under current plans, feedstock for the plant is to be provided by the expansion of Aramco’s existing Ras Tanura refinery, which will add 400,000 barrels a day (b/d) of capacity to the plant, which currently processes 500,000 b/d. In total, the two projects are estimated to cost more than $25bn.

However, sources close to the project say Aramco is having major difficulties with the site it has set aside for the project, and that the company is now reviewing other potential locations. These include Jubail, a second Gulf industrial city to the north of Ras Tanura, and Ras al-Zour, another industrial port 80km to the north of Jubail.

The company is currently working on a feasibility study for the locations internally, and is expected to come to a decision over a site for the project by either late March or early April. The reason for the location change remains opaque, but senior sources working on the scheme tell MEED that it is related to the terrain of the current site.

If the decision is made to move the project, the partners will need to reassess the overall cost of the scheme, one senior executive working on the project says. The cost of a location change would impact Aramco particularly, says another source. If the complex is built at Ras al-Zour, a completely new refinery would need to be built to supply the plant with feedstock. Moving the project to Jubail would require a reallocation of existing refining resources at existing refineries.

Feed studies for the project were scheduled for completion by the end of 2009, but Aramco and Dow later pushed back the end date to the third quarter of 2010 after they realised that they were under-resourced (MEED 5:6:2010).

Sources close to the design process now say it may be the end of the year before the studies are completed. Dow and Aramco both declined to comment.

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