Saudi Aramco and Japan’s Sumitomo Chemical Company are likely to delay the development of the second phase of the massive PetroRabigh petrochemicals complex by over a year as the project is reconfigured and a new feasibility study undertaken.
Sources close to the project say that the two partners had initially hoped that a project finance deal for the scheme would be in place before the end of the year. That now looks unlikely to occur until early 2013, meaning the project could be up to 18 months behind schedule.
|PetroRabigh net profit (SRm)|
|Third quarter 2009||-844.7|
|Fourth quarter 2009||-323.7|
|First quarter 2010||271.5|
|Second quarter 2010||121.8|
|Fourth quarter 2010||52.6|
|First quarter 2011||698.5|
“The delay is because after the feasibility study was completed, it was decided that the project needed to be reconfigured and a new feasibility study done,” says a source in Saudi Arabia close to the project.
Japan’s JGC, which was awarded the contract for the front-end engineering and design (feed) in mid-2009, is expected to have to redo a lot of its work on the project. “Aramco is looking to have certain aspects of the feed reconfigured and JGC will have to comply with any changes they are told to make,” says a source close to Aramco says. “This will take time.”
Several engineering, procurement and construction (EPC) contractors interested in the project confirmed the scheme was now expecting delays.
Delays to the project may actually turn out well for the sponsors. The scheme, expected to be similar in size to the $10bn phase one, would have been in the market at the same time as another massive Aramco project, the Jubail petrochemicals complex being developed in joint venture with the US Dow Chemicals, expected to cost around $18bn.
“Aramco has got enough happening at the moment and [PetroRabigh] phase one is already up and running so there is no need to rush,” one contracting source says. “Putting some time between this and the Aramco Dow project will be beneficial in the long run.”