Aramco resurrects $3bn refinery project

03 June 2015

Scheme was on-hold as oil giant focused on more essential developments and managed its cash-flow

  • Project has been on hold since January.
  • Two packages expected to be awarded.
  • Prequalification to start shortly.

Saudi Aramco is on the verge of resurrecting its plan to rehabilitate its Ras Tanura Refinery Clean Fuels Project in the Eastern Province.

The long-awaited scheme has been on hold since the start of 2015, due to Aramco wanting to manage its cash flow and ring-fence more essential projects. However, prequalification of contractors for the main engineering, procurement and construction (EPC) contracts is expected to start by the end of June.  

The usual timeline for the prequalification to contract award for a scheme this size is about seven months.

The exact scope of works will not be known until the tenders are released, but speculation is growing that it could be a scaled-down version of previous plans with the option of additional phases in the future. Two packages are expected to be released.

“The main crux of this is the clean fuels and this will be the essential part of any new tender,” says a hydrocarbons source based in Saudi Arabia. “It’s hard to ascertain exactly what the budget will be until the capacity of the new work is known.”

The Ras Tanura scheme was meant to have been awarded in late 2013 or early 2014, but was retendered after the original bids came in well over Aramco’s preferred budget. The packages on offer in the prior bidding round for Ras Tanura were:

  • Offsites and utilities
  • Naphtha and toluene

The naphtha and toluene package was to be split into units with the following capacities:

  • Naphtha hydrotreater – 140,000 barrels a day (b/d)
  • Catalytic cracking reformer – 90,000 b/d
  • Isomerisation – 65,000 b/d
  • Toluene – 70,000 b/d

Ras Tanura has also been earmarked as a potential site for additional petrochemicals production facilities, as part of the kingdom’s refining petrochemicals integration initiative, along with Jizan in the southwest of the kingdom and Yanbu on the Red Sea coast. However, these plans are almost certain to stall by several years as oil prices remain low.

The Ras Tanura refinery is fully owned by Saudi Aramco and is the largest oil facility in Saudi Arabia, with a capacity of 550,000 b/d.

Five myths about Saudi Aramco

Over the past 12 months the volatile oil price has led to literally thousands of media articles about Saudi Aramco, the world’s largest oil company.

Being in the spotlight is not something Aramco does that well, preferring to keep its media profile very much under the radar.

However, since oil prices started to tumble in June 2014, various narratives have started to emerge that have either painted Aramco as the oil producer’s enemy or as a bumbling behemoth lurching from one crisis to another by making rash business decisions.

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