DAMMAM, SAUDI ARABIA (May 9, 2005) - Isam A. Al-Bayat, Saudi Aramco’s Vice President of New Business Development, spoke at the Saudi Mega Projects 2005 conference today, providing details on three Saudi Aramco mega projects that represent investment opportunities worth billions of dollars.
The projects, Al-Bayat explained, are spearheaded by the company’s New Business Development organization, which was established in early 2003 with the mission of identifying business opportunities that leverage Saudi Arabia’s competitive advantage with respect to feedstock and fuels. “In addition, New Business Development seeks to create new revenue streams and promote the development of the local economy,” Al-Bayat added. “Our ultimate goal is to provide maximum support for further industrialization, expansion and diversification of the national economy.”
Al-Bayat’s talk focused on three mega projects:
- The Rabigh Integrated Refinery & Petrochemical Complex
- A grassroots export refinery
- A refining and petrochemical project at Ras Tanura & Ju’aymah
Rabigh Refinery and Petrochemicals
The Rabigh project was begun in May 2004, when Saudi Aramco and Sumitomo Chemical of Japan signed a memorandum of understanding to develop the existing 400,000 barrel-per-day (bpd) Rabigh Refinery into an integrated refinery/petrochemical complex. The new complex will integrate the refinery with a world-scale high olefins FCC and ethane-based steam cracker, which will be coupled with downstream derivative units that will produce 2.4 million tons per year of secondary petrochemicals. The project is scheduled to come on stream in the third quarter of 2008.
The second project Al-Bayat discussed is a proposed 400,000 bpd export refinery. “Saudi Aramco has approached the international market, seeking investor interest for this important project,” Al-Bayat said. He noted that potential investors were given information packages outlining the key elements of this proposed investment opportunity, including its 400,000 bpd capacity.
The cost of the proposed export refinery would be an estimated $4 billion to $5 billion, and Al-Bayat said that Saudi Aramco envisions an initial public offering that would allow domestic investors to own stock in the venture.
Ras Tanura & Ju’aymah Refinery and Petrochemicals
Similar to the Rabigh project, Saudi Aramco is looking into the possibility of integrating petrochemicals production with the Ras Tanura Refinery and Ju’aymah Industrial Area feedstocks. Ras Tanura Refinery currently consists of a 325,000 bpd hydrocracking refinery and a 200,000 bpd condensate splitter. The proposed integration would include a large ethane/naphtha-based cracker, an aromatics recovery complex, and complementary downstream derivative units to produce new secondary petrochemicals. The total project cost is expected to be about $6 billion, Al-Bayat said.
After discussing each of these in-progress and upcoming mega projects, Al-Bayat said that New Business Development isn’t resting on its laurels. Other potential investment opportunities that it is facilitating include:
- Development of new conversion indistries from petroleum-based olefins and aromatics, such as carbon fibers
- A power generation and distribution center to support Saudi Aramco’s southern-area facilities (which includes the Hawiyah Gas Plant NGL Recovery Project)
- Divestment of non-core company functions, such as gas turbine repair and refined-products distribution.
Al-Bayat stated that Saudi Aramco is embarking on an unprecedented era of capital expansion with expenditures in materials and equipment in excess of $20 billion, and on services of more than $23 billion through 2010. Al-Bayat stressed that Saudi Aramco has helped and will continue to help local manufacturers with Saudi Aramco’s consumption data, projected usage and standards to allow them to conduct accurate feasibility studies to locally manufacture these materials and equipment.
Al-Bayat concluded his talk with a message to investors: “We are ready whenever the investor is, to be a secure supplier of fuel and feedstock, to serve as the source of a major asset base for expansion, and to participate in, or encourage investors to capitalize on, these opportunities aimed at achieving continued economic development in the Kingdom.”