China Petrochemical Corporation (Sinopec Group) and Saudi Aramco have signed a joint venture agreement related to the ongoing development of Yanbu Aramco Sinopec Refining Company (YASREF) Limited, formerly the Red Sea Refining Company. The agreement brings together two world-class companies that will complete construction and operate a highly competitive full-conversion refinery in Yanbu`, on the west coast of the Kingdom of Saudi Arabia. The agreement was signed by Fu Chengyu, Chairman, Sinopec Group and Khalid A. Al-Falih, President and CEO, Saudi Aramco.
The joint venture agreement follows a Memorandum of Understanding (MOU) between Saudi Aramco and Sinopec in March 2011, and following the JV agreement, Sinopec will hold equity interest of 37.5% in YASREF, with Saudi Aramco holding the remaining 62.5%. The YASREF joint venture marks another significant phase of several progressing partnerships between Saudi Aramco and Sinopec across the hydrocarbon value chain in the Kingdom of Saudi Arabia and in China. Saudi Aramco and Sinopec both bring significant knowledge and expertise to the joint venture, which represents the strengthening of their strategic partnership to enhance the trade of transportation fuels between a significant energy producer and a significant consumer. In-Kingdom refineries, such as the one being built by YASREF, possess the location advantage to supply domestic and international markets, to the east and west.
The YASREF project involves construction of a new "grassroots" refinery on the Yanbu` site covering over 5.2 million square meters. With construction well underway, the project is on schedule with 10% of construction completed. The YASREF refinery is scheduled to be operational in the second half of 2014. The refinery will process 400,000 bpd of Arabian Heavy crude oil and will produce high-quality transportation fuels that meet the most stringent refined product specifications for domestic and international markets. The refinery is set to have the capacity to produce 90,000 bpd of gasoline, 263,000 bpd of ultra-low-sulfur diesel, along with by-products consisting of 6,200 metric tons per day of petroleum coke and 1,200 metric tons per day of sulfur. Saudi Aramco's extensive and integrated hydrocarbon facilities in Yanbu` will be utilized to supply crude oil feedstock to YASREF and to export transportation fuels. The refinery project includes mega-processing units, utilities and interconnecting piping, associated crude oil and refined product storage, as well as the offsite facilities necessary to support the safe and efficient operation of the refinery. YASREF will also provide a platform for increased industrial development in the Yanbu` area supporting the expansion of the domestic economy and providing job opportunities for Saudi nationals, as well as local enterprises. It is estimated that the refinery will create 1,200 direct and 5,000 indirect employment opportunities. Additionally, YASREF's primary contractors will hire and train many Saudi engineers and technicians in various technical and administrative fields during the project's execution phase.