The Jizan Economic Forum was held at the end of February and was planned as a showcase for one of Saudi Arabia’s most beautiful, but remote regions.

There is a feeling the city is on the verge of experiencing bigger and better things, and the 600 delegates who visited Jizan for the forum seemed eager to explore the commercial opportunities starting to present themselves.

At the centre of it all is the 106-square-kilometre Jizan Economic City (JEC) development, and at the centre of that is Saudi Aramco. The national oil company was mandated with developing the city in 2013 to expand on the 400,000 barrel-a-day (b/d) refinery and 4,000MW power plant it is constructing there.

Aramco will execute the first phase of JEC, then eventually look to hand it over to a more recognised developer while it focuses on building up conversion industries around the 16-sq-km refinery and power plant site.

Operational hub

There is no question Jizan has become a key operational hub for Aramco and the company is fully committed to making JEC succeed. The forum in late February was attended by Oil Minister Ali al-Naimi and Aramco CEO Khalid al-Falih. Both stressed the commitment Riyadh and Aramco have to Jizan.

Jizan is regarded as a beautiful region, but its proximity to Yemen is what makes it so vital for development in the eyes of Riyadh. The Yemen border is only about 60 kilometres away from Jizan city and there is a heavy police and military presence everywhere.

The Saudi government is worried that, without investment, Jizan could turn into a breeding ground for Islamic extremism, which is why it is so heavily committed to enabling the population by providing jobs and creating prosperity.

In Jizan city, there is a pervading sense of the region being on the cusp of significant change. There is also a frontier sensibility, with the feeling that money can be made.

Construction has just been finished on an attractive corniche in Jizan city itself and there are several resort hotels either planned or close to completion. Tourism is a major attraction and the Jizan Province authorities realise that as people earn higher disposable incomes, they will want leisure activities on which to spend their money.

“Since 2011, I have always been busy, and this is a big change for me,” says Mohammed, a taxi driver in Jizan city. “Everyone thinks that now Aramco is here everything will be different; before it was very quiet.”

Key fact

At the height of construction, there will be 70,000 workers involved in the JEC project

JEC=Jizan Economic City. Source: MEED

Jizan is about to get a lot busier as the refinery and the integrated gasification combined-cycle (IGCC) power plant planned for JEC are due to start their project execution phases in 2015 and early 2016.

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.

Project complexity

“There is no question these are things we are thinking about constantly,” says a senior Aramco official. “The highway from Jizan is almost complete, so that will take the strain off the minor roads, but the issues with mobilising 70,000 people to site every day are not going to be solved with the construction of a new road.”

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 site and this is due to be completed by late 2017.

Security issue

The one pervasive issue surrounding the entire JEC project is security, and it is clear that while all of the international contractors working on the scheme have concerns, there is also a feeling that Riyadh is providing cover.

“This is Jizan and everyone asks about security,” says an executive from a participating contractor. “But there is a strong military presence here and JEC is remote and difficult to access. We are confident there will be no issues at this time.”

Being so close to Yemen, there are no chances being taken in Jizan and it is commonplace to see people being stopped and searched by the police; there is a very visible security presence.

Economic prosperity

The most positive outcome from the Jizan Economic Forum was the sense that Jizan itself is ready to step out of the shadows and embrace this new commitment to change being promoted by Riyadh and Aramco. The city’s officials seemed genuinely delighted that economic prosperity is on its way, and they welcomed the changes this will bring.

There is still a long way to go before the city can lay claim to being of an equal stature to other large cities in the kingdom. The security worries will probably never abate, there is no international airport and other transport infrastructure is almost non-existent, but these are all issues that can be addressed as time moves on.

Jizan is enjoying its moment in the spotlight and, as long as city officials know the real hard work will begin when Aramco has finished its $20bn investment, the future looks positive.

Q&A Suleman al-Bargan, general manager, Jizan refinery complex, Saudi Aramco

What is the current status of the refinery and integrated power plant?
For the refinery, we are at the end of the detailed design, and materials are arriving at the site in preparation for the construction phase. This should start in June. The IGCC [integrated gasification combined-cycle] power plant is still in detailed design [stage] and we are 60 per cent complete. A lot of the material procurement is being put into place.

The port has been cited as essential for the successful execution of the refinery and power plant. What is its status?
The port work has been accelerated and is progressing very well. We expect what we call the construction jetty to be ready [in April] and this will enable us to bring in the heavy long-lead items for the construction of the refinery and IGCC power plant.

Unlike the other two recent greenfield complexes Aramco has built at Yanbu and Jubail, Jizan is just a semi-conversion refinery. What was the reasoning behind this?
We are a semi-conversion whereas the others are full-conversion because they have coke processing at the end. We chose not to go down that route because we need the vacuum residue to use for the gasification process and to produce power.
We integrate the two facilities by taking the bottom-of-the-barrel vacuum residue and sending it into the gasification process. This will be the largest gasification plant in the world for petroleum liquids to use for power generation. This has never been done before for liquids. Using the bottom-of-the-barrel residue, which is usually utilised for asphalt production, as the feedstock for the gasification process means we can create synthetic gas [syngas], and this will be used to drive the turbines for power generation.

As this is the first time this has been attempted, does this make the Jizan refinery more complex?
If you look at the complexity of this scheme with the additional IGCC power plant, then Jizan is more complex than both Jubail and Yanbu. No question.

What is the product yield?
Because we are using the vacuum residue we are not producing fuel oil. We will be producing gasoline, diesel, jet fuel, benzene and paraxylene as our main products.

There has been some confusion over the capacity of the IGCC power plant, with two figures being given. Can you please clarify the exact figure?
The IGCC plant’s capacity is 4,000MW, and part of that will be used for the refinery and the power facility itself. We will be providing between 2,200MW and 2,600MW to the grid. 4,000MW is what is being produced in the whole of the southern region right now, so production is going to be half of the region’s capacity.

The initial plan was for Jizan to be a completely independent refinery, and now the whole concept of Jizan Economic City [JEC] is under Aramco’s full control. How did this come about?
JEC had been under another developer and in 2013, it was given to Aramco as an additional part of what we were doing in the region. Our focus is the refinery, [port] terminal and power plant, and the first phase of JEC.
The government was interested to see a kick-start of activities. This translates as putting into place the infrastructure, the enablers to make sure the future industries are going to be able to grow. The mandate for Aramco is to develop these enablers as well as our own facilities. I am talking about areas such as reverse osmosis, sewerage, communications, roads, site preparations and the electricity grid.
We are carrying out the front-end engineering and design for many of these at the moment and you should see them being tendered by October this year.