Massive Expansion of Saudi Aramco Refining and Petrochemical Industries
- Pipeline
- Saudi Aramco News
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Author: Aramco ExPats
Released 18 June 2006
Saudi Arabia has started a massive expansion of their refining and petrochemical industries. Along with the expansion of refineries within the country, Saudi Aramco has engaged in joint ventures that will provide them with an even larger network.
According to Saudi Aramco President and Chief Executive Officer Abdallah S. Jum'ah, Saudi Arabia plans to increase its crude oil production to 12 million b/d by the end of 2009.
Increase Oil Production
Jum'ah told delegates at the annual Asia Oil & Gas Conference in Kuala Lumpur that Aramco currently has half a dozen major oil increments at various stages of development. "In other words, in the next 5-6 years, we will be adding production capacity. Some of that capacity will offset natural decline, while the remainder will serve to expand our maximum sustained production capability, which by the end of 2009 will reach 12 million b/d," he said. "At the same time, in keeping with Saudi Arabia's current oil policy and as a commitment to world oil markets, we will maintain our surplus production capacity of 1.5-2 million b/d, even as our actual production grows," he said.
Saudi Arabia began development in late 2004 when it signed a deal with Japan’s Sumitomo Chemical to build PetroRabigh. The complex, estimated to cost about $10bn, will produce 18.4 million tons per annum of high value petroleum products and 2.4 million tons of ethylene and propylene based petrochemical derivatives annually.
Last week, Saudi Arabia signed two major deals with international oil companies, both for constructing multi-billion dollar refineries. Total, France’s major oil company, signed a deal with Aramco, estimated to be worth $6bn, to develop one refinery in Jubail and ConocoPhillips signed a $6bn deal to build a 400,000bpd oil refinery in the Red Sea city of Yanbu. Both of these refineries are scheduled to come online in 2011.
The recent Aramco joint ventures are part of a much larger $50bn investment program to refine more domestically and at refineries built in partnership with others. Aramco is planning to build new refineries or expand existing ones in China, Indonesia and South Korea.
Refineries Tailored for Heavy Crude
One considerable advantage that Saudi Arabia will gain by building more refining capacity domestically and investing in refineries globally is that most of these will be tailored for Saudi’s ‘heavy crude’. Unlike many Western refineries that are geared for lighter varieties of crude, Aramco’s refineries will be designed to utilize the Kingdom’s heavier grades of oil. Therefore Saudi Arabia can count on its oil being purchased even if there were to be a future drop in aggregate demand for oil.
Increased Jobs in Saudi Arabia
By forming joint ventures with leading international oil companies enables the Kingdom to acquire knowledge and technical competence. The other advantage of so much ‘value-added’ investment is the jobs it will provide for younger Saudis. Not only will these be skilled jobs, but they can also be considered as private sector jobs. Referring to the recently signed deals, Saudi Aramco’s president, Abdallah Jum’ah said that they help attract foreign investment into the Kingdom’s economy and expand it.