Saudi Aramco is mulling two options that would see the state-owned oil company increase its domestic refining capacity by up to 285,000 barrels a day (b/d) at Yanbu on the Red Sea coast of Saudi Arabia.

The first options would be the construction of a new refinery with a capacity of 285,000 b/d. The facility would be a greenfield scheme and be built in Yanbu’s industrial zone although the exact location of any new refinery scheme has not yet been established.

The plans are still at the study phase and if Aramco does decide to go ahead then the front-end engineering and design tender would be floated in late 2014/early 2015. Engineering, procurement and construction contracts would then follow in the second half of 2015.

The second option would be a complete rehabilitation of Aramco’s wholly-owned refinery that is already in operation in the city. The refinery has been operational since 1983 and has a capacity of 225,000 b/d. According to the Saudi Aramco website, the refinery’s offtake of gasoline, diesel, jet fuel LPG and fuel oil predominantly services the local market. 

The amount of additional capacity rehabilitation of the existing Yanbu refinery would yield has not yet been decided as both options are still resolutely at the feasibility study phase. However, if it was to rival the plans for the new refinery then it would make it the second largest refinery in Saudi Arabia.

The budget for either scheme would run into several billion dollars, but due to the early stage of the plans it is not possible to attach any accurate figure.

“Aramco wants to increase its domestic refining capacity to meet local demand,” says an oil and gas source in the kingdom. “Whatever option [Aramco] takes regarding the refinery, its product slate will be used to service domestic requirements.”

Saudi Aramco is investing heavily on its domestic and foreign refining operations as it pushes its plans to increase operations across the full hydrocarbon value chain.

The Yanbu Aramco Sinopec Refining Company is a joint venture between Saudi Aramco and China’s Sinopec that is building a 400,000 b/d refinery in Yanbu. The scheme is under execution and completion is expected in 2014.

There have also been several announcements regarding a massive oil-to-chemicals plant being constructed in the city with both Aramco and Saudi Basic Industries Corporation (Sabic) keen to be involved in the scheme.

Elsewhere in Saudi Arabia a 400,000 b/d refinery wholly owned by Aramco is under construction in Jizan and expected to start operations in 2017. The Saudi Aramco Total Refinery and Petrochemicals Company (Satorp), a joint venture between Aramco and France’s Total has now fully commissioned a 400,000 b/d refinery at Jubail in the Eastern Province.  

Aramco’s overseas unit is also on the verge of completing a deal that will see the company become the majority shareholder in the S-Oil refinery in South Korea. Aramco Overseas Company has paid $2bn for South Korea’s Hanjin Energy’s 28.4 per cent stake meaning it now owns 63.4 per cent of the facility.  

Saudi Aramco declined to comment when contacted by MEED.