According to regional projects tracker MEED Projects, Saudi Arabia is currently the most active GCC country in terms of petrochemicals schemes. The kingdom has more than $28.5bn of chemicals engineering, procurement and construction (EPC) projects currently under execution.   

The bulk of this spending has been on megaprojects initiated specifically by Riyadh to develop downstream industries and create hundreds of thousands of job opportunities.

However, what is clear from the work under way is that oil major Saudi Aramco has become the main driver of new petrochemicals schemes in the kingdom, ahead of chemicals giant Saudi Basic Industries Corporation (Sabic).

Incredible scale

“Sabic has certainly been active and is a really potent global force, but there is no doubt the sheer scope of Aramco’s domestic ambitions dwarf Sabic’s activities over the past five years,” says a petrochemicals industry source. “Sabic has some interesting projects, but the scale of some of the Aramco schemes is incredible.”

The project central to Aramco’s future downstream vision is the $20bn Sadara Chemical Company facility under construction at Jubail in the Eastern Province. Sadara is the largest petrochemicals scheme ever built in one phase and it has been designed specifically to integrate the kingdom’s vast hydrocarbons value chain. 

Elsewhere, on the Red Sea coast, the oil giant is executing a $5bn expansion of the PetroRabigh integrated refinery, which it operates in joint venture with Japan’s Sumitomo Chemicals. The project will be completely focused on petrochemicals.

Meanwhile, Sabic is working on a smaller, $3.4bn elastomers scheme in Jubail along with the US’ ExxonMobil. This project is also being executed with downstream conversion industries in mind. 

With so much work under way, it is understandable that the market for new chemicals ventures in Saudi Arabia is quiet and many contractors believe this lull will continue until well into 2015.

According to MEED Projects, there are currently only $3.1bn-worth of petrochemicals schemes at the design and main contract tender stage in the kingdom. Almost all of these planned facilities are small-scale and are aimed at producing speciality products that can be converted easily into end-user products.

Front-end engineering and design (feed) work on a planned second phase of the Saudi Aramco Total Refining and Petrochemical Company (Satorp) is expected to start as soon as the initial phase is fully commissioned. Plans have not been revealed by Aramco and its French partner Total, but the scheme is expected to focus completely on petrochemicals, with a budget well in excess of $5bn.  

Despite there being no large-scale schemes imminent, Riyadh’s future plans for its petrochemicals industry still outstrip those of its GCC rivals in terms of scope. MEED reported in late August that Aramco is drawing up plans to integrate its domestic oil refining operations with massive, new chemicals complexes. Three initial locations have been selected at Jizan, Yanbu and Ras Tanura, and a potential budget of $70bn has been mooted for the programme.

These plans are very much in their infancy and studies are still being carried out, but there is a genuine feeling in the kingdom that the next wave of expansion will be approved by Riyadh. “I am sure the integration will happen, but it is a question of how far it will go,” says the petrochemicals industry source. “The plans for Jizan are at a more advanced stage, but the major scheme will be [located at] Yanbu.” The plans indicate a new direction for Saudi Arabia’s chemicals sector, with liquid feedstock being utilised far more than gas for future projects. “Sadara was the first to change to a selection of feedstock including naphtha,” says the petrochemicals source. “This looks likely to become more common with future plants.” 

The scope for Jizan involves two separate schemes being constructed adjacent to the $7bn refinery that is under construction. Both will utilise liquid feedstock provided from the refinery. Ras Tanura is expected to follow suit, with Aramco and Sabic currently mulling a number of options. If all of the schemes are initiated, the plans for Yanbu on the Red Sea coast will dwarf all industrial projects in the kingdom and will make the city a serious rival to Jubail.

Private participation

A complex three times larger than Sadara has been mooted, although plans are very much in the embryonic stage. Aramco and Sabic are expected to be heavily involved, but opportunities are expected for local and international petrochemicals players to get involved. The budget could be as high as $50bn.

Qatar is the GCC’s second-largest chemicals producer and has two massive schemes planned to come on stream before the end of the decade. It is one of the few countries in the region that does not have to worry about sourcing gas feedstock for new projects as it has both ethane and natural gas liquids, such as propane and butane, available in abundance.

Qatar Petroleum (QP) is the client on both the planned schemes, but has a different joint venture partner for each of them. The Al-Karaana Petrochemicals Complex is a $6.4bn joint venture of QP and the UK/Dutch Shell Group. The project includes the construction of a mixed-feed cracker that will use ethane and propane. This will feed three process plants: a linear alpha olefins unit, a monoethylene glycol unit and an oxo-alcohols unit. MEED reported in August that the scheme has been split into two separate EPC packages covering the cracker and the technical units. Tenders are planned to be released in early 2014.

The second project is similar in scope and is running about 12 months behind Al-Karaana’s schedule. The $7.4bn Al-Sejeel petrochemicals complex is a joint venture of QP and Qatar Petrochemicals Company (Qapco), and will produce 1.4 million tonnes a year (t/y) of ethylene. This will feed technical units comprising high-density polyethylene, linear low-density polyethylene, polypropylene and butadiene.

The feed tender for Al-Sejeel was released in September and the EPC phase is expected to begin towards the end of 2014.

In the long term, Qatar’s focus on downstream petrochemicals schemes looks set to continue, with Doha committed to raising capacity to 23 million t/y by 2020 from about 10 million t/y today. This suggests more world-scale projects are planned and that the hydrocarbons EPC market will be dominated by petrochemicals in the near future.

Oman is also looking to maximise its hydrocarbons value chain after spending several years and billions of dollars boosting output from its ageing oil fields. Schemes worth a total of $13bn are planned to be built at Sohar in the north and Duqm in central Oman. The initial plans for Duqm primarily involve refining, but a $9bn chemicals complex is also set to be constructed. The product slate and capacity is unknown, but liquid feedstock producing chemicals aimed at feeding downstream converters is likely. 

Oman Refineries & Petroleum Industries Company (Orpic) is expected to float the feed tender for a steam cracker and petrochemicals complex in Sohar within the next two months. The Liwa Plastics project also plans to produce polyolefins from liquids and is expected to cost about $3.6bn, with start-up in 2018. The project will be the largest petrochemicals plant ever built in Oman and will feature the sultanate’s first steam cracker.

The UAE has had a relatively quiet period in its petrochemicals sector over the past couple of years and this is not expected to change. According to MEED Projects, only $1.9bn of schemes are planned in the UAE.

UAE activity

However, Abu Dhabi National Chemicals Company (Chemaweyaat) is breathing new life into its Tacaamol chemicals megaproject in Ruwais. Another scheme is mooted for the emirate of Fujairah, but is still in the very early stages.

Bahrain and Kuwait have little in the way of new petrochemicals schemes, but with both countries having ambitious plans to rehabilitate their refinery operations, there is hope this will free up liquids that could be used in the chemicals sector.

Saudi Arabia’s continued drive to promote job creation via its petrochemicals sector is the dominant force driving the region’s major chemicals projects. However, a new dawn of schemes utilising liquid feedstock and feeding domestic converters as well as international customers looks set to keep contractors and engineering companies extremely active over the next 10 years.

Key fact

Qatar is aiming to raise its petrochemicals capacity to 23 million tonnes a year by 2020

Source: MEED