The Saudi Arabian petrochemicals industry is accelerating its move downstream, with a number of projects that will make feedstock products for the automotive industry being planned.
The most high-profile project is Saudi Basics Industry Corporation’s (Sabic) joint venture with the US’ ExxonMobil Elastomer, which will be built at Al-Jubail Petrochemical Company (Kemya) in the Eastern Province.
MEED reported in early May that the joint venture had sent out solicitations of interest (SOI) for the engineering, procurement and construction packages (EPC) on the project (MEED 9:5:11).
The three packages have a combined estimated value of $2bn. They are:
- Ethylene propylene diene monomer (EPDM)/polybutadiene rubber (PBR) facilities ($800m)
- Halobutyls rubber plant ($600m)
- Offsites and utilities ($600m)
When completed, the elastomer project will produce about 400,000 tonnes a year (t/y) of carbon black, rubber and thermoplastic speciality polymers. The plant will use ExxonMobil technology and the products will be sold on local and international markets.
Carbon black is derived from heavy petroleum products and is mostly used by the automotive industry to add strength to plastic and rubber products used in car production.
“This project is proof that [Saudi Arabia] is starting to look seriously at attracting automotive manufacturers to the kingdom,” a source from an international engineering company based in the Eastern province says. “It has been in the planning stages for some time and a number of different strategies have been put forward, then discarded, but this time it’s feeling right.”
While the elastomers project will soon be moving to the EPC phase, there are several projects that also plan to provide feedstock and materials for downstream sectors such as automotive and electronics.
Sabic is also part of a joint venture with Japan’s Mitsubishi Rayon subsidiary Lucite and plans to build a methyl methacrylate (MMA) plant in the kingdom. About 80 per cent of MMA is used in the construction and automotive sectors.
The project is called Alpha 2 and the joint venture is currently at the bidding stage for the front-end engineering and design (feed). The capacity will be 250,000 t/y.
The companies shortlisted by the joint venture partners for the feed include:
- Jacobs (US)
- Technip (France)
- Tecnicas Reunidas (Spain)
- WorleyParsons (Australia)
“This project has been below the radar for some time and the initial completion date was due to be in 2013,” a source familiar with the project says. “Obviously it is going to take longer than that now and 2014-15 is more likely.”
The source adds that the EPC contract will be executed on a lump-sum turnkey basis when the tender is released after the feed is complete.
However, while specialist petrochemicals projects are moving forward, MEED reported that the $5bn PetroRabigh phase II joint venture is likely to be delayed as the joint venture partners sort out finance issues (MEED 11:5:11).
Saudi Aramco and Japan’s Sumitomo Chemical have released the tenders for all the EPC packages for PetroRabigh phase II, but questions still remain over the timescale.
“The tenders are out now [for PetroRabigh phase II], although the reports about the financing are causing confusion,” a contracting source familiar with the project says. “From our point of view, a gap of a few months between Aramco Dow and PetroRabigh phase II would give us a better chance of winning work on both projects.”
PetroRabigh’s phase II will produce more than 2 million t/y of speciality chemicals and products when completed. Some of the offtake will be used on the Plus tech downstream park that has been built next to the complex.
“The past few years have been all about increasing the kingdom’s oil and gas output,” the international engineering company source says. “Now they have almost achieved that, the focus has turned to adding value to all of that extra output and turn it into products and jobs for local people. A world-leading petrochemicals industry is how they will achieve that.”