Jizan enters next phase

23 April 2015

Construction of refinery and power plant will offer up some serious challenges for Saudi Aramco

Saudi Aramco’s commitment to the Jizan Economic City (JEC) has been the driving force that has kept the project alive over the last few years and almost guarantees that the project will be a success.

All of the major packages for the 400,000 barrel-a-day (b/d) refinery and 4,000MW integrated combined cycle (IGCC) power plant have now been awarded and the construction phase should start in mid-2015.

However, despite this incredible turnaround of the JEC, there is still a mountain to climb before Aramco can hand the development over to another company.

The refinery, IGCC power plant and port facilities will be one of the most complex downstream facilities in the world, being built in one of the most remote regions of Saudi Arabia. This is certain to put even more pressure on the new timeline for completion of early 2018.

The sheer scale of the project is incredible and the entire budget including the recently awarded industrial gases complex is well in excess of $20bn.

“Just building a world-scale refinery in Jizan was going to be a challenge, but the power plant takes this to a whole new level,” says a Saudi Arabia-based oil and gas source. “The challenges in building both side by side and then connecting them together are massive.”

The IGCC power plant will be the largest of its type anywhere in the world and be the first time heavy oil has been used as the feedstock for the gasifiers. The facility’s budget actually exceeds the refinery and the scheme is still in the detailed engineering phase meaning that the construction is still some months away.

Adjacent to this will be the industrial gases complex, which was recently awarded to a joint venture comprising the US’ Air Products and the local Acwa Holding in a deal worth $2.1bn. The facility will have a capacity of 75,000 tonnes a day.

Contractors carrying out work



IGCC Power Plant

IGCC=Integrated gasification combined-cycle. Source: MEED

The project will be the largest of its type in the world and will be carried out on a build-own-operate-transfer (BOOT) basis. It also represents a huge outlay by the consortium, especially Acwa Holding, which will retain 75 per cent of the complex when it is complete. Acwa Holding is owned equally by the local Al-Muhaidib Group and Abdullah Abunayyan Group.

“Aramco wants partners in Jizan and this deal means that one of the largest private investors in the kingdom is now on board,” says a source familiar with the deal. “Acwa [Holding] is putting a lot of money into this project.”

The prospect of three huge schemes being built at the same time also highlights serious logistical issues that will need to be managed.

At the height of construction, there will be 70,000 workers involved in the project, which means the material and human resources of Jizan will be put under increasing pressure. JEC is about 100km north of Jizan city, so a substantial rise in traffic and other logistical issues will need to be addressed.

Much of the material resources will be brought in through the port. However, the construction of a megaproject worth almost $20bn will pose additional challenges such as how best to mobilise, feed and accommodate 70,000 workers.

The official says a shift system with staggered start times is the preferred option, as it will mean there is a continued rotation of people eating, sleeping and travelling to work, rather than two conventional rush hours leading to extensive delays.

Delays are not something Aramco wants any more of. After a long, detailed design period that lasted more than two years, the oil major is keen to see the project progress as quickly as possible, with completion targeted by early 2018 at the latest.

The major problem so far has been the complexity of building a refinery and an interconnecting IGCC power plant. This has taken much longer than anticipated but, now the engineering issues have been ironed out, there is a good chance the scheme can progress on schedule.

Aramco’s mandate also covers the infrastructure of the whole JEC 116-square-kilometre site and this is due to be completed by late 2017. However, there should be no real surprise if the scheme is delivered later than this date.

Security of the site is also high on Aramco’s agenda, but there is an element of counter-intuitive thinking to the fact that the site is close to the Yemen border.

Because of this close proximity, there is a huge military presence in the area, as well as a large contingent of civil defence, such as police and security personnel. The area has a small regional airport, but JEC is relatively remote and not easily accessible, so while this offers challenges from material and human resource perspectives it also means that it is easier to defend against attacks.

Just to get to this point has taken the JEC nine years since the first contracts were awarded. This means that, despite the many challenges facing the project, it has learned that hard work and perseverance will pay off, eventually.

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