From its headquarters in the eastern city of Dhahran, Saudi Aramco is overseeing a major petrochemicals development programme involving three projects that will be integrated with refineries

These projects are Petro-Rabigh, which is scheduled to start production in 2008; the Ras Tanura petrochemical complex integrated with the existing Ras Tanura refinery and targeted for commencement of commercial operations in 2012, and the Yanbu Petrochemical Masterplan, currently in its initial stages of conceptualisation and set to start in 2014.
Industrial parks are envisaged near the Petro-Rabigh and Ras Tanura complexes.
Each of the  projects will be implemented as joint-ventures with strategic partners and with a capital structure that could include debt as well as equity and possibly project financing. Each could also involve an initial public offering of part of the shares
 “As part of the company’s strategic imperative to leverage Saudi Arabia’s hydrocarbon resources, Saudi Aramco has been pursuing major opportunities for building new export refineries and integrating our existing refineries with new petrochemical projects,” said Azzam Y Shalabi, the company’s director for new business development.
“Such a strategy makes fundamental sense for the company and the kingdom for two main reasons: it will add value to the hydrocarbon resources of the kingdom, and products available from the new refinery and petrochemical projects will provide a foundation for the kingdom’s economy to be further diversified, leading to additional investments and the creation of additional employment opportunities.”
The groundbreaking for the first of these projects, Petro-Rabigh, was performed last month (March) by Saudi Aramco and its joint venture partner, Sumitomo Chemical, a major producer of polyolefins. The integrated refining and petrochemical complex will be built in the Red Sea town of Rabigh, on the kingdom’s west coast.
The joint feasibility study began on May 9, 2004, when Saudi Aramco and Sumitomo Chemical signed a memorandum of understanding to launch the effort. Subsequently, the joint venture was formed in September 2005.
When completed in late 2008, the Petro-Rabigh project will be one of the largest integrated refining and petrochemical projects ever built at one time. A total of 2.4 million tonnes per year (tpy) of petrochemical solids and liquids, along with large volumes of gasoline and other refined products, will be produced.
The project has also created third-party investment opportunities in Saudi Arabia’s private sector for utilities and other related infrastructure.
Work on all the EPC contracts has started, including the construction work on site for the major units.
More recently, at a signing ceremony on March 2 in London, Petro-Rabigh signed financing agreements with Japan Bank for International Cooperation (JBIC), Public Investment Fund of Saudi Arabia (PIF) and 17 financial institutions in respect of facilities totaling $5.8 billion. The facilities have been raised for the Rabigh refinery and petrochemical project to be developed.
The project has also created third-party investment opportunities in Saudi Arabia’s private sector for utilities and other related infrastructure.
The second project in the programme is Ras Tanura. Now in the preliminary development phase, it will feature the first application in the Middle East of cracking refinery liquids (naphtha) coupled with ethane cracking and aromatics production.
This combination is in line with the company’s strategic direction to integrate refining operations with petrochemicals to produce diverse products that are essential for the establishment of an advanced export-oriented conversion industry (such as synthetic rubber and automobile parts).
The project will integrate with the 550 MBD Ras Tanura refinery located on the east coast of Saudi Arabia to produce about 1.35 million tpy of ethylene, 0.9 million tpy of propylene and 1 million tpy of aromatics.
In the Yanbu Petrochemical Master Plan, the goal is to create an integrated business opportunity with the existing Yanbu Refinery and leverage streams from the existing and future joint venture refineries in Yanbu’, on the West Coast.
The Master Plan is currently under development. “We are evaluating options to expand and upgrade the existing 235,000 barrels per day Yanbu Refinery into an integrated olefins and aromatics complex that will provide a diverse line of petrochemical products,” said Shalabi.
“The heart of the integration will be centred on a naphtha-based steam cracker that maximises production of propylene, butadiene, and benzene for further conversion to semi or specialty type products. Start-up is tentatively targeted for 2014.”
The petrochemicals sector provides further opportunities for Saudi Aramco to develop a position of sustainable competitive advantage, said Shalabi
“The petrochemicals business is attractive, with strong projected growth rates expected to exceed global GDP growth.
“Saudi Arabia offers a stable and secure supply of feedstock to support petrochemical opportunities, a competitive energy cost environment to enhance the operations of these ventures, and the financial resources to make them happen. In a global environment, which is becoming increasingly concerned with stable hydrocarbon supplies, locating petrochemical ventures closer to the feedstock source is becoming a considerable strategic advantage,” he remarked.
“Saudi Aramco’s existing and planned refining assets present attractive petrochemical integration opportunities. Furthermore, the kingdom’s geographic location, close to growing markets, also makes us a strong contender for export-oriented petrochemical facilities.”
Shalabi said the new petrochemical projects would have strong potential macro-economic benefits for the kingdom, especially ventures which would be based on refinery liquid feedstocks in addition to gas.
Saudi Arabia’s existing petrochemical industry is largely based on ethane, which has led to a strong focus on commodity grade ethylene derivatives such as polyethylene, MEG and styrene.
The cracking of liquid feedstocks, available from integration with refineries, would broaden the product slate and result in the production of additional products such as propylene and butadiene. Also, refinery liquids cracking will be the source for producing the much-needed aromatics value chain.
These primary petrochemical products will be the foundation on which secondary industries will develop, producing a broad product slate of raw materials for competitive export-oriented plastics conversion industries producing.
Not only traditional plastic finished products but also new more value-added converted products will be created.
Support for these conversion industries is one of the key metrics Saudi Aramco employs with potential partners in developing new downstream projects
Saudi Aramco’s strategic thrust in downstream activities is in line with the kingdom’s long-term vision for economic development and diversification.
“The longer-term vision for Saudi Arabia moves us beyond exporting feedstocks and basic chemicals to producing more value-added chemical derivatives and even converted finished goods,” observed Shalabi.
“We will leverage our advantaged cost position to capture more of the value chain, including labor-intensive conversion opportunities which would create more economic diversification and generate additional employment opportunities.”