Construction

GlobalData: Saudi Aramco and Sabic committed to Yanbu megaproject

The project in Yanbu is said to be the first oil-to-chemicals scheme of its type in the Middle East

The Saudi Aramco and Saudi Basic Industries Corporation (Sabic) joint venture (JV) is moving forward with its plans of building a mega petrochemicals complex in Yanbu, according to Indrajit Sen, Energy & Technology editor at analytics firm GlobalData.

The move is said to demonstrate the JV’s commitment to the long-term goal of expanding the Kingdom’s downstream sector. The JV proceeding with the project planning reflects that they are mindful of the cost-intensive nature of building a crude oil-to-chemicals (COTC) project explained Sen.

Building such a complex is estimated to cost up to $25bn, and for Aramco, justifying that level of capital expenditure when it is paying the Public Investment Fund (PIF) $69.1bn for the majority acquisition of Sabic, is perhaps impractical, he remarked.

“The shifting dynamics of petrochemicals demand outlook has also said to have been a factor for the project operators, with the JV reportedly considering revising down the planned petrochemicals output capacity of nine million tonnes a-year. However, the project has by no means been shelved – neither had it been officially put ‘on hold’ by the operators at any point in time,” said Sen.

Sen noted that sticking to the original plan of building a mega COTC complex remains an option for the partners, and the JV is considering the alternate, cost-efficient approach of building an integrated refining and petrochemicals project in Yanbu, and even roped in Wood Group as a consultant.

Sen concluded, “Part of this alternative plan is building the greenfield petrochemicals plant in close proximity to the Yasref refinery in Yanbu for feedstock advantage. Most integrated refining and petrochemicals projects currently under development in the GCC are all estimated to cost under $10bn. The Aramco/Sabic JV maybe a while away from configuring the best option for the megaproject but their commitment towards establishing a downstream facility in Yanbu remains in place.”

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