The Saudi/French joint venture Saudi Aramco Total Refining and Petrochemical Company (Satorp) has entered into a series of wide-ranging discussions with Sadara Chemical Company regarding the proposed phase two expansion of the Satorp refinery.
The $9.6bn 400,000 barrel-a-day (b/d) Satorp refinery scheme is currently being constructed at Jubail Industrial City in the Eastern Province of Saudi Arabia by Saudi Aramco and France’s Total. The $20bn Sadara Chemical Company is a petrochemicals complex being built adjacent to Satorp by Aramco and the US’ Dow Chemical.
“There has been a lot of interest from Satorp in pushing ahead with a phase two expansion and it has always been about petrochemicals in some form,” says an oil industry source based in Saudi Arabia. “The one stumbling block to this has been the fact that one of the world’s largest petrochemicals complexes [Sadara] is being built next door, but now it is my understanding that an agreement has been reached as to what the Satorp phase two will be.”
The source adds that a succession of technical consultation meetings have taken place between Total, Dow and Aramco aimed at formulating a plan that fully maximises the value chain from both Satorp and Sadara. The meetings have been a success, according to a source and a plan for the potential scope of the Satorp phase two has been agreed subject to a full feasibility study.
“Coming up with a plan that fully integrates what could finally amount to well more than $30bn-worth of refining and petrochemicals capacity is as difficult as it sounds,” says the source. “And that is even before you get to the costing and the viability issues.”
The Satorp refinery project is a 62.5:37.5 joint venture between Aramco and Total and has been under construction since late 2009. The scope of works involves the construction of a refinery complex that will produce a diverse product mix when completed in late 2013.
About 72 per cent of the offtake will be gasoline and diesel. Jet fuels will also be produced, as well as some base petrochemicals, including paraxylene, benzene and propylene. Some of the gasoline and diesel will be exported and the rest used to meet soaring domestic demand that is currently growing at 5-7 per cent a year. The base petrochemicals produced in the first phase will be sold to Sadara and other petrochemicals producers in the kingdom.
Aramco is spending billions of dollars on increasing its domestic refining capacity. The oil giant has two other 400,000 b/d refineries at Jizan and Yanbu, which are both on the Red Sea coast of the kingdom. It is also rehabilitating its existing domestic refineries and has initiated a number of clean fuels programmes aimed at lowering the sulphur content of its products.
The company also has extensive plans designed to increase its petrochemicals capabilities with a $5bn phase two planned at the PetroRabigh complex on the Red Sea coast of Saudi Arabia, as well as the Sadara scheme.
Sadara is a 50:50 joint venture between Aramco and Dow and will be the largest petrochemicals complex ever constructed in a single phase when it is completed in late 2016. In contrast to Satorp, the construction phase for Sadara is still in its infancy and several packages at the complex have not yet been awarded.
The Sadara complex is an indication of the change in strategy by Riyadh regarding lengthening of the oil and gas value chain in the kingdom. The complex will produce an extremely diverse set of products that are suitable to feed into a number of core conversion industries and be made into actual products.
“The performance plastics that Sadara will produce feed straight into scores of different applications in automotive manufacturing, as well as other key sectors,” says a Middle East-based chemical analyst. “[Riyadh] is hoping this will translate into the creation of thousands of jobs.”
Satorp and Sadara were not available for comment when contacted by MEED.