Riyadh Is To Boost The Kingdom's Refining Capacity By More Than 1M B/D.

Saudi Arabia is aiming to boost refining capacity in the kingdom by more than 1 million b/d and a new plant on the Red Sea will help it reach the goal, a Saudi oil adviser said. To ensure its place as a major supplier of much-needed transport and heating fuels by early next decade, Riyadh will spend billions. Overall investment of $150 billion in oil, gas and petrochemicals has been budgeted for the next five years.

"We are in the process of becoming a major refining centre to the world", Ibrahim al-Muhanna, adviser to Saudi Petroleum & Mineral Resources Minister Ali al-Naimi, said on the sidelines of an energy conference. He said the aim was to have total refining capacity of more than 3 million b/d in Saudi Arabia.

Riyadh has moved fast to show it is determined to tackle a worldwide refining crunch that helped drive US oil prices close to $80/barrel this summer. The kingdom has already struck deals worth $12 billion to build two new refineries - one 400,000 b/d plant with Total of France at Jubail on the Gulf coast, another 400,000 b/d one with ConocoPhillips of the US in Yanbu' on the Red Sea coast. The two export facilities will be on stream by the end of this decade.

Muhanna said plans were also in the works for a third refinery in Jizan on the south-western coast. Details of the facility will be revealed after the ministry completes its study. Saudi Aramco now has five domestic refineries with a combined capacity of around 1.4 million b/d. Its two domestic joint-venture refineries, with ExxonMobil in Yanbu' and Shell in Jubail, boost capacity at home to more than 1.9 million b/d, making Saudi Aramco one of the largest refiners in the world. The Saudi oil adviser was confident the world's growing thirst for fuel would justify Riyadh's ambitious refining target. He saw demand for oil continuing to grow at an annual rate of around 1.1 million b/d.

Muhanna disputed the assumption of some major consuming governments that high oil prices would stunt economic growth in importing nations. He said: "Our observation is that this has not happened. This year, the countries with the highest economic growth are largely net importers such as China and India". To bolster its position as the world's top exporter of crude and build its standing on natural gas, Saudi Arabia will spend up to $80 billion over the next five years on rigs, refineries, wells and processing plants. That investment covers Riyadh's long-standing plan to expand crude oil production capacity to 12.5 million b/d by 2009 from 11.3 million b/d now.

Some $70 billion will be spent on petrochemicals during the five-year period. Riyadh now supplies 8% of the world's petrochemicals and aims to increase its market share to 15% in next decade, Muhanna said.

Ibn Zahr Olefins Job Retendered: The Saudi European Petrochemical Co. (Ibn Zahr) has retendered the lump-sum turnkey contract to build a new 288,000-t/y OCU olefins conversion unit (OCU) at its polypropylene complex in Jubail.

Four engineering, procurement and construction (EPC) companies on Nov. 5 submitted revised prices for the job (worth about $100m): ABB Lummus Global of the US, CTCI of Taiwan, Samsung Engineering Co. and Daelim Industrial Co. of South Korea.