Saudi Basic Industries Corporation (Sabic) has confirmed it plans to build an oil-to-chemicals plant in Saudi Arabia, but stopped short of confirming the location as Yanbu on the Red Sea coast.

Sabic stated that the project will be completed by 2020 and that it will process about 200,000 barrels a day of crude oil. It did not disclose whether the scheme would be executed alone or as a partnership with another company. Sabic added that up to 100,000 direct and indirect jobs could be created.

MEED reported in early April that Sabic was finalising the study for the oil-to-chemicals scheme. The project is highly likely to be located at Yanbu could cost the region’s largest listed company $30bn to execute.

To produce chemicals directly from crude oil and utilise all of its derivatives would require the construction of a complex that could be two or three times larger than anything ever seen before in the kingdom.   

A petrochemicals refinery would process crude and feed the offtake into three steam crackers. One would crack natural gas liquids (NGLs) and liquid petroleum gas (LPG), a second would crack naphtha and a third would crack fuel oil. 

The product slate of the three crackers would include ethylene, propylene, butadiene, benzene, toluene and xylene. These would be fed into downstream processing facilities that would be constructed as part of the complex.

Oil-to-chemicals plants do require a large amount of fuel to operate. On the scale described by Sabic, the plant would require an additional 30-40 per cent of crude to provide the power to run the facility.

In Saudi Arabia, this would mean a subsidy of $36 a tonne for the crude used for power, equivalent to the $0.75 a million BTUs the Oil Ministry charges for ethane in industrial use. Sources in the kingdom indicate that securing this price would be a central factor deciding whether the scheme becomes economically viable.

MEED revealed in September 2013 that several petrochemicals initiatives were being planned across the kingdom that would utilise liquid feedstock such as NGLs and naphtha sourced from current or planned refineries.  

Other potential locations identified by Riyadh include Ras Tanura in the Eastern Province and Jizan in the southwest.