Aramco, JGC in talks on Rabigh ethane cracker

19 November 2004
Saudi Aramcois understood to be holding direct negotiations with Japan's JGC Corporationfor the engineering, procurement and construction (EPC) package on the Rabigh ethane cracker. The project comes under the estimated $4,300 million programme to turn the kingdom's biggest refinery at Rabigh into a world-scale integrated refining and petrochemical complex (MEED 22:10:04).

If Aramco's negotiations with JGC are concluded successfully, the Japanese company will carry out construction of the 1.3 million-tonne-a-year (t/y) cracker. It is not clear whether JGC's contract would also cover some or all of the complex's downstream and refinery elements.

Aramco and its 50:50 joint venture partner, Sumitomo Chemical Company of Japan, are understood to have selected US-based Shaw International- JGC's strategic partner in the construction of ethylene projects - to provide technology for the cracker. A source close to the project says that the client and Shaw are close to clarifying final details over the technology package, with a decision expected 'soon, now that Ramadan is over'.

Aramco's decision to secure technology first and then select an EPC contractor differs from the more common approach by clients to tender the technology and EPC package as one contract. Industry sources say Aramco chose the direct approach in an attempt to fast-track the Rabigh project, given that the process to tender the technology and EPC portions would have taken at least 12 months.

The limited number of technology providers and EPC contractors is likely to have been another reason for Aramco's decision. 'There is a supply crunch in the market,' says one industry source. 'There are [up to] 16 cracker projects in the Middle East and only five companies that can supply technology.' In addition to Shaw, ABB Lummus Globaland Kellogg Brown & Root, both US-based, Germany's Lindeand Paris-based Technip provide cracker technology.

UK-based Foster Wheeler Energyis the project management services (PMS) contractor on the Rabigh programme and will carry out the front-end engineering and design (FEED) portion on all project elements except the cracker.

Aramco and Sumitomo signed a memorandum of understanding to carry out the project earlier this year (MEED 14:5:04). In addition to building a petrochemical complex, Aramco plans to raise refining capacity by 80,000 barrels a day (b/d) and build a 400-MW captive power plant (MEED 15:10:04). Aramco will provide 400,000 b/d of crude oil, 95 million cubic feet a day of ethane and up to 15,000 b/d of butane as feedstock. The ethane will be pumped in through a new pipeline to be built between Rabigh and Yanbu.

Sumitomo-Mitsui Banking Corporation (SMBC)is acting as the financial adviser on the Rabigh programme.

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