Sector News

Saudi Aramco, SABIC launch bidding at key chemical project

August 28, 2017
Chemical Value Chain

Saudi Aramco and Saudi Basic Industries Corp (SABIC) have launched bidding for engineering work on their joint crude oil to chemicals project, industry sources said, a key step towards developing the $20-billion-plus complex.

The project, known as COTC, the first major scheme to bring the two giants together, is expected to process Arabian Light and Extra Light crude oil, one of the sources told Reuters.

Several plants are expected to be built including a 400,000-barrels-per-day integrated crude distillation and vacuum unit, a distillate hydrotreater, a vacuum gas oil hydrocracker, a residual fluid catalytic cracking unit, a mixed feed cracker, as well as polyethylene, polypropylene, butadiene and aromatics recovery units.

Aramco and SABIC are still considering where to locate the chemicals site; at Yanbu, near a power plant; or in Jubail, close to Sadara, which is an Aramco joint venture with U.S. company Dow Chemical.

The closing date for bids for pre-front end engineering and design work (pre-FEED) and FEED for the COTC is Sept. 25, one of the sources said, adding that the plant is expected to be commissioned by the end of 2024.

Another source said pre-FEED is expected to be completed by late 2018, with FEED to be finalised by late 2019. Aramco and SABIC are expected to launch bidding for construction by mid-2020.

SABIC did not immediately respond to a Reuters request for comment. Aramco said it “declines to comment on rumor or speculation”.

Aramco’s chief executive has said it was a priority for the company to convert crude oil to chemicals as the state oil producer aims to diversify operations in the run-up to an initial public offering of shares next year.

Downstream, which covers refining and chemicals, will help Aramco boost value from hydrocarbons by securing revenue streams and become less vulnerable to oil price swings.

LESS GAS

Analysts say the project will help reduce natural gas usage in petrochemicals at a time when the kingdom is trying to use more gas to generate power, rather than burning crude oil, as it seeks to diversify its energy mix.

“What is new and different is that the prices of crude and gasoline/diesel have come down more than petrochemicals. This makes the incentive to produce petrochemicals greater than to make gasoline and diesel,” Mark Routt, chief economist for the Americas at KBC Advanced Technologies, said.

“It certainly could usher in a new ’wave’ of investments in producing those petrochemicals,” he said.

The project is strategic for Saudi Arabia, which plans to expand further into the petrochemical chain to export more end products and grow beyond oil.

It is also crucial for Saudi Arabia’s economic reform plan and could create as many as 100,000 jobs.

SABIC’s CEO told Reuters in May that COTC could produce more than 18 million tonnes of materials yearly.

By Reem Shamseddine

Source: Reuters

comments closed

Related News

May 15, 2022

New York’s EPR and packaging reduction bills lauded as game-changers in plastic pollution battle

Chemical Value Chain

The US State of New York is introducing two new bills to combat over-packaging, poor recycling rates and litter issues, including an Extended Producer Responsibility (EPR) program requiring companies such as McDonald’s and Amazon to pay for the cost of packaging disposal and recycling.

May 15, 2022

Borealis and Reclay launch entity focused on lightweight packaging 

Chemical Value Chain

The new organization’s mission is to redesign the critical steps of the plastics sorting and recycling system for post-consumer lightweight packaging (LWP) to speed up circularity, born from a need to meet the rising market demand for high-quality recyclates for use in high-end plastic applications.

May 15, 2022

Starbucks and Hubbub launch reusable packaging fund as COVID-19 diminishes consumer appetite

Chemical Value Chain

Starbucks and Hubbub have launched a £1 million (US$1.22 million) “Bring It Back Fund” to increase the uptake of reusable packaging in the F&B industry. The funding will go toward innovative ideas that make it easier for customers to use alternatives to single-use packaging by supporting pilot projects that help shift consumption habits.