Petro Rabigh unveiled

The idea of establishing a mega integrated petrochemicals project in Saudi Arabia goes back to the 1990s, but low oil prices have adjourned plans to upgrade the existing refineries and build integrated complexes. The plan to integrate refineries aimed to maintain the existing crude throughput of the refinery, reduce the production of heavy fuel oil and upgrade refineries to produce higher value products, as well as providing feedstock for the downstream units.

The huge windfall generated by high oil prices in 2003 helped Aramco revive its dream to establish an integrated petrochemical complex. The firm then started looking for a partner firm that could place the joint venture back on track and make the project a real possibility.

The search for the partner didn’t take long as Aramco settled on Sumitomo chemicals from Japan reasonably quickly. “Our business strategy and competitive strengths best matched the Rabigh project,” said Hiromasa Yonekura, CEO of Sumitomo Chemicals during the inauguration ceremony of the complex.

The first contact between the two partners was during the third quarter of 2003. In August 2005, Aramco and Sumitomo inked the joint venture agreement. “It was a special day as it was the same day the Saudi King assumed office in the Kingdom,” said Khalid Al-Falih, Saudi Aramco CEO and president. Aramco supplies the project with crude oil, ethane and butane feedstock, and will also market the refined output of the Petro Rabigh complex. Sumitomo, meanwhile, provides the proprietary petrochemical technology and marketing base for the petrochemical products.

The project is now a real benchmark in the petrochemical industry. “In terms of pure size, Petro Rabigh is among the 15 largest refineries in the world based on crude distillation capacity and in the top eight largest refinery peer groups,” reveals Zaid Al-Labban, president and chief executive officer of Petro Rabigh.

 “The construction of the project was completed within 30 months,” says Al-Labban. “It is a world record to construct such a big project in a single phase in 30 months only,” he adds. “Generally with most projects like this one, it takes up to 15 years to complete such a mega project on this scale,” Al-Labban observes.

Refinery to integration

The original idea for the integrated complex was a simple refinery ‘topping’ facility, that recovers the products by distillation without any conversion to lighter, higher value products. Currently the refinery has a crude processing capacity of 400,000 b/d and accounts for 19% of Saudi Arabia’s refining capacity. “The addition of new refining units, specifically the high olefin fluid catalytic cracking (HOFCC) unit, which is the largest in the world, is a logical expansion of the processing capability to upgrade low value heavy oils to valuable lighter products,” says Ayman Guezaz, HOFCC section head at Petro Rabigh.

“The integration with the ethane cracker for the production of ethylene and derivative petrochemical units for polymers production is a further logical extension of the upgrading process to valuable products,” observes Guezaz. “The proposed processes are generally based upon proven operations and have already been used in combination in other plants around the world,” he adds. “However, some of Rabigh’s process units represent major and significant capacity increases in terms of unit size, and the overall project requires a very high degree of integration between the process units,” Guezaz remarks.

The complex comprises proprietary licensed units and non-licensed units, which are configured to process the feedstock and produce high value-added refined and petrochemical products.The project also includes new core facilities, including a variety of processing units designed to process the atmospheric residue from the existing crude distillation unit (CDU) to higher value products to process the ethane feedstock to ethylene and field butanes for alkylation.

The project marks Aramco’s  first entry into the petrochemicals sector and is the first of several downstream investments designed to keep as much value as possible inside Saudi Arabia from domestic oil output, while trying to create jobs for a young and rapidly growing population. The project is expected to produce a total of 2.4 million t/y of petrochemical products. “The product will be shipped to different markets around the world using approximately 200,000 containers,” says Al-Labban.

Sumitomo Chemicals will take advantage of its strong marketing networks, especially in Asia, to handle the sales of most petrochemicals products through Sumitomo Chemical Asia, using its base in Singapore to target the growing Asian markets.

Petro Rabigh can tap into existing infrastructure at Rabigh, including port facilities and tanks. “It has access to new utilities plant built under the adjacent independent water, steam and power project (IWSPP),” explains Guezaz. The IWSPP was constructed by Rabigh Arabian Water and Electricity Company (Rawec), a consortium of Japan’s Marubeni, JGC Corporation and Istochu with ACWA Power of Saudi Arabia. A 25-year supply agreement has been signed with Rawec for 380MW of electricity, 7405 tonne/hr of water and 1655 tonne/hr of steam, according to Sumitomo. Target Markets

The location of the complex, on the Red Sea coast of Saudi Arabia, gives the company a base from which to develop the European market and strengthen the existing Asian sector. “We have plans to go into the European market during the first quarter of 2010,” says Al-Labban.

Around 80% of chemical exports will go to Asia, while the rest is shipped to North Africa and the Arabian Gulf. Of the refined products, about 80% will stay in the Kingdom, including gasoline, diesel, fuel oil, and 50% of the jet fuel output.

The plant now exports all its naphtha, but that may change if Petro Rabigh opts for a phase two expansion. Engineering work on the expansion is being carried out by JGC in Japan and should be wrapped up by October 2010. The two partners are expected to make  a final investment decision on the expansion plan by that time.

“Phase two is something that we have plans to carry out. The question is over the size and the range of products,” Al-Labban said. “We will spend the money if we see the opportunity to make a profit.”

The two partners are also considering bringing in outside investors for the second phase. “Shareholders are looking at scenarios under which Petro Rabigh would offer land and guaranteed feedstock streams and investors would manufacture the end product,” says Al-Labban.

“It is a matter of sitting down and negotiating and seeing what deals come out. If they are economically attractive, those deals will happen.”

As a part of its ambitious plan, an adjacent industrial conversion park was completed in late 2008, which will be a base for new processing companies – mainly plastic processing – and the firm hopes to attract 50 companies to the facility, both from this region and internationally.