Saudi Arabia is planning a huge expansion in its petrochemicals production and is prepared to spend as much as $70bn on facilities in three strategic locations. 

The state-owned Saudi Aramco is the main driver of the new initiative that will seek to integrate several of the kingdom’s major oil refineries with new petrochemicals schemes. Other major players are set to include government-controlled Saudi Basic Industries Corporation (Sabic) and Farabi Petrochemicals Company, a privately held firm based in Jubail.  

The three locations being considered for extensive petrochemicals operations are the Jizan Economic City (JEC), Ras Tanura and Yanbu. “The idea is that major oil refineries will provide feedstock to the new facilities and thus lengthen the value chain for the kingdom’s hydrocarbon reserves,” says an oil and gas source based in Saudi Arabia. “The plans, especially in Yanbu, are massive and the scale could dwarf anything that has been attempted before.”

The world’s leading chemicals* exporters
Country  Rank
US 1
Germany 2
China 3
Belgium 4
Netherlands 5
Japan 6
France 7
South Korea 8
UK 9
Singapore 10
*=Non-pharmaceutical chemicals. Source: Gulf Petrochemicals and Chemicals Association

The JEC is to host two separate schemes that will be constructed adjacent to Aramco’s $7bn oil refinery currently under construction. Aramco will be the owner of one of the projects and is carrying out a series of studies to best determine what products the prospective plant will produce.

“[Aramco] has a lot of plans for its petrochemicals business and has a lot of projects under construction,” says the oil and gas source. “It will want to make sure it gets this one right.”

The world’s leading chemicals* exporters
GCC countries  Rank
Saudi Arabia 13
Qatar  39
UAE 45
Oman 52
Kuwait 56
Bahrain 95
Total exporters 164
*=Non-pharmaceutical chemicals. Source: Gulf Petrochemicals and Chemicals Association

The plant being planned by Farabi is further advanced and has already established what chemicals will be produced at the site.

“Farabi is in advanced talks with Saudi Aramco to tie down the required feedstock, as well as secure the adequate power and land requirements,” says a Saudi Arabia-based chemical company executive. “Because Jizan is an area in need of jobs and development, I expect [Farabi] to be able to secure everything it needs to take this forward.” 

The potential for petrochemicals production at Ras Tanura has been apparent ever since the kingdom’s largest refinery announced plans to execute an expansion that would enable it to produce aromatics and other products, such as paraxylene and naphtha. The $20bn Sadara Chemical Company project was originally going to be developed at Ras Tanura, but was moved to Jubail to take advantage of existing infrastructure at the Jubail Industrial City.

Aramco and Sabic are now exploring the potential of creating a major petrochemicals hub adjacent to the Ras Tanura refinery. Studies are still being carried out, but it is expected that several technical units would be constructed with a diverse product mix that could then be used to feed converters further downstream.

The largest project under consideration is a huge petrochemicals hub being constructed at Yanbu. Industry insiders have speculated the potential complex could dwarf the $20bn Sadara Chemical Company project in Jubail, with some saying that it could be anything as three times the size and cost about $50bn in total.

“The plans for Yanbu are vast in their scope, but it would almost certainly not be a one-phase project like Sadara,” says the Saudi Arabia-based chemical company executive. “If the scale of the plans is correct, then it would be unprecedented in the Middle East.”

Aramco and Sabic will be central in the plans of the Yanbu complex, but it is expected other strategic partners will also be sought for the scheme. It has not yet been established whether this means other local petrochemicals producers or global multinationals such as Dow Chemical, the 50:50 joint-venture partner of Aramco’s Sadara project. 

MEED also reported in late August that the Saudi/French joint venture Saudi Aramco Total Refining and Petrochemical Company (Satorp) at Jubail looks set to go ahead with a second-phase expansion plan.

The $9.6bn, 400,000 barrel-a-day refinery is undergoing commissioning and it is expected to make an announcement shortly. The second phase will concentrate on producing petrochemicals and will offer a different product mix to the Sadara plant that is being constructed on an adjacent plot of land.

Saudi Aramco, Sabic and Farabi were not available for comment when contacted by MEED.