EXCLUSIVE: Saudi Arabia to award technology deals for chemicals project

06 September 2018
The JV partners are seeking to purchase licensed technologies worth over $1bn for their crude oil to chemicals project

Saudi Aramco and Saudi Basic Industries Corporation (Sabic) are looking to award contracts worth at least $1bn to downstream technology service providers, for purchasing licensed technologies for their $20bn-$25bn joint crude oil-to-chemicals (COTC) project in Saudi Arabia.

The Aramco-Sabic joint venture (JV) plans to buy licensed technologies for both the refining and petrochemical operational aspects of the project, a source has told MEED.

The JV is seeking refining technologies for three aspects: package 1 relates to residual hydrocracking; package 2 for vacuum gas oil (VGO) and base oil extraction; and package 3 pertains to diesel and naphtha hydrotreating.

The petrochemical technology requirements have been split into four packages.

Aramco and Sabic issued the invitation to bid (ITB) for the three refining packages in the first quarter of this year.

Each of the refining packages are worth at least $200m, meaning the three jobs are worth $600m combined, according to the source.

Bids for package 1 were submitted towards the end of January, for package 2 in March and for package 3 in May, the source said.

Prospective bidders for the refining packages include:

  • Shell Global Solutions (UK/The Netherlands)
  • Axens (France)
  • Chevron Lummus Global (USA)
  • Honeywell UOP (USA)
  • Haldor Topsoe (Denmark)
  • Sinopec (China)
  • Siluria Technologies (USA)

The source expects the three refining contracts to be awarded in November.

It is possible for one technology provider to win all three refining deals, as per the source.

The source could not confirm if the ITB for the petrochemical packages have been issued or not. The value of those four packages and their scope are also not known, although it is estimated that each will come to at least $200m in value.

That implies the refining and petrochemical packages will together be worth a minimum of $1bn.

Aramco and Sabic is eyeing a crude oil to chemicals conversion rate of 70 per cent from the COTC project, which is understood to be quite high as per current industry standards.

Selection of efficient process technologies is therefore a crucial aspect of the megaproject's success, the first of its kind in the Mena region.

Aramco struck a deal with Siluria Technologies in June to use the US startup firm’s chemical technology for the COTC project.

In January, Aramco, through its wholly-owned subsidiary Saudi Aramco Technologies, also signed a three-party Joint Development Agreement (JDA) with US oil and gas services provider Chicago Bridge & Iron (CB&I) - now part of McDermott - and CLG, to scale up and commercialise its thermal crude-to-chemicals (TC2C) technology.

Aramco and the Saudi Basic Industries Corporation (Sabic) signed the memorandum of understanding (MoU) in November 2017 for the proposed project to convert the 235,000 barrels a day (b/d) Yanbu refinery into an integrated refinery and petrochemicals complex.

Aramco-Sabic awarded two front-end engineering design (feed) and project management consultancy (PMC) contracts for the project to the UK’s Wood Group in March and US firm KBR in April.

The tender for the main engineering, procurement and construction (EPC) contract for the megaproject is expected to be issued in June 2020, with commercial bid submissions slated to take place in September of that year.

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