Aramco's petrochemical expansion

26-Sep-05

Saudi Arabia accounts for more than 75% of the GCC's petrochem production, translating to 7% of global supplies for basic, intermediary and final petrochemical products. The region plans to increase its investment in the sector for capacity expansion. The US$8 billion expansion of Saudi Arabia's Red Sea refinery at Rabigh will raise Aramco's oil refining capacity and will be Aramco's first petrochemical production. Aramco has joined forces with Japan's Sumitomo Chemical Company to produce ethylene and propylene, and provide sales and distribution expertise to the joint venture for which Aramco will supply gas.. By combining petrochemicals capability to the existing refinery, economies of scale are expected in the use of feedstock and the sharing of power and water and other utilities. In later stages an aromatics complex and other units are being considered. Similar integration between existing refineries at Yanbu and Ras Tanura, and add on petrochemical plants are also being planned. The Gulf countries themselves are considered a promising market for petrochemicals. In the next five years, Saudi processors are predicted to double the 1 million tpa of polymers they currently convert. There is a strategic push to raise local petrochemical production, expected to lower costs in the domestic market serving to further stimulate development of domestic downstream industries and employment in the sector.