Petrochemicals

Of the $17bn of contracts likely to be awarded in the region’s petrochemicals sector in 2012, $13bn are in Saudi Arabia

Source: MEED

No country in the region is investing more in its petrochemicals sector than Saudi Arabia and the kingdom is expected to dominate project activity in the year ahead. According to regional projects tracker MEED Projects, some $17bn of petrochemicals contracts are likely to be awarded in the Middle East in 2012, of which $13bn are in Saudi Arabia.

Elsewhere, political instability or a relative scarcity of gas mean some ambitious projects will remain on hold

Sadara Chemical Company, the joint venture between Saudi Aramco and the US’ Dow Chemical, is due to continue making awards on its $20bn petrochemicals complex at Jubail in early 2012. In October, South Korea’s Daewoo Engineering & Construction was awarded two packages for the tank farms at the complex, which will have a capacity of about 8 million tonnes a year (t/y) when completed.

PetroRabigh bids

Several sizeable contracts are also due to be awarded on the $5bn PetroRabigh phase two integrated petrochemicals project next year.

The project owners Saudi Aramco and Japan’s Sumitomo Chemical are already evaluating bids for the engineering, procurement and construction (EPC) packages at the complex on the west coast of Saudi Arabia. The packages include an aromatics complex and a debottlenecking of the cracker.

The first phase began production in 2009 and has a capacity of more than 20 million t/y of petroleum and petrochemical products. Phase two will produce more than 2 million t/y of speciality chemicals.

Other schemes set to move forward in the kingdom next year include Saudi Basic Industries Corporation (Sabic) and the US’ ExxonMobil Chemical’s $2bn elastomers project at the Al-Jubail Petrochemical Company (Kemya) complex in the Eastern Province.

The first EPC contract for the methyl propanediol unit was awarded to South Korea’s GS Engineering & Construction in September, but three larger packages have yet to be awarded, including the offsites and utilities.

The elastomer project will produce about 400,000 t/y of carbon black, rubber and thermoplastic speciality polymers. Carbon black is used by the automotive industry to add strength to plastic and rubber products used in car production.

Elsewhere, Qatar is finally pushing ahead with one of its long-awaited petrochemicals projects. At the World Petroleum Congress in Doha in December, Qatar Petroleum and UK/Dutch Shell Group signed an agreement detailing the scope and commercial principles for the joint development of a petrochemicals complex at Ras Laffan.

A tender for the front-end engineering and design (feed) is expected before the end of the year, with an award expected in early 2012. The US’ Foster Wheeler is the project management consultant for the scheme.

The proposed complex will include a steam cracker, a 1.5 million t/y monoethylene glycol plant and a 300,000 t/y linear alpha olefins plant. It will also produce one other as yet unnamed olefin derivative. The request for prequalification for the EPC contracts is expected in mid-2012.

In Kuwait, Petrochemical Industries Company (PIC) is planning to build an olefins cracker at Al-Zour that will produce about 2.4 million t/y of chemicals. A joint venture partner has yet to be revealed, but industry sources are expecting an announcement during the first quarter of 2012. 

Elsewhere, political instability or a relative scarcity of gas mean some ambitious petrochemicals projects will remain on hold. No real movement is expected on the Duqm petrochemical complex in Oman or any of the large-scale petrochemical projects planned in Egypt in 2012.

Focal point

The next 12 months is going to be all about Saudi Arabia. This is reflected in the fact many contractors have already started to position themselves away from other countries in the region to focus on the kingdom.

The majority of the kingdom’s projects are being planned by state-owned giants such as Aramco and Sabic and are therefore highly likely to go ahead. This has not gone unnoticed. 

Across the wider region, tightening of budgets, unstable governments and a shortage of gas feedstock will mean progress on many projects, especially petrochemicals, will be sluggish.