SAUDI ARABIA - The Rabigh Refinery.

Now part of an integrated refining and petrochemicals complex, the oil refinery at Rabigh, on the Red Sea coast, has a capacity of 400,000 b/d. It is being upgraded and expanded to 480,000 b/d under an extensive plan to produce clean fuels. Saudi Aramco and Sumitomo Chemical Co. of Japan formally on Aug. 1 signed the 50-50 joint venture agreement (JVA) for the $8 bn world-scale integrated refining and petrochemicals complex at this Rabigh complex. The two companies have formed a limited liability joint venture company called Rabigh Refining & Petrochemical Co. (Petro-Rabigh) to implement the scheme. The move is a culmination of a 12-month feasibility study begun in May last year. The project calls for the expansion of the refinery by 80,000 b/d and the development of a 1.3m t/y ethane cracker and various downstream petrochemical process units, the contract awards for which are imminent. The JVA signing came after Sumitomo admitted that the project's overall cost had recently been revised upwards to at least $8,000m, up from an original $4,300m estimate in view of rising EPC prices and the costs of steel and other raw materials. The integrated JVA should be on stream in 2008. EPC contractors submitted bids on Sept. 17 to Saudi Aramco for the pipeline package on the Rabigh refinery conversion project. Each contractor has submitted a base price and an alternate offer. The base price is for the engineering and installation works, while the alternate offer includes the line pipe. The bidders include Saipem and Techint of Italy, Suedrohrbau of the Netherlands, Turkey's Tekfen, Lebanon's Contracting & Trading Co. (CAT) and local firms Faysal M Qahtani Est. (FMQ) and Tamimi Construction. The lump-sum turnkey (LSTK) contract is estimated to be worth $100-200m. The successful bidder will build parallel ethane and butane pipelines over 212 km, between the integrated Rabigh refinery/petrochemicals plant and the existing Yanbu' NGL facility. The contract also entails an access route on the entire pipeline as well as numerous related facilities including compressors, duty pumps and a 13.8-kV substation. UK-based Foster Wheeler Energy is the project management services (PMS) contractor. A contract award is set for late October, with the project due to be completed by the second quarter of 2008.

This is Saudi Aramco's first entry into the petrochemicals business. So far all major petrochemicals ventures have been the domain of the Saudi Arabian Basic Industries Corp. (SABIC). The ethane feedstock will be pumped from the Eastern Province through the East-West pipeline, a twin-pipe crude oil system, with the smaller (48-inch) line being converted to carry gas in an $800m project. A spur line will be built to Rabigh.

Saudi Aramco assumed full control of the Rabigh refinery in June 1995, ending a 50-50 JV with Petrola of Greece. This gave Saudi Aramco freedom to go ahead with an expensive upgrade, as Petrola had been against the project for years. Saudi Aramco replaced the top management of the refinery soon after taking over. (Petrola used to sell its share of the output to the Mediterranean market as well as to refiners in Singapore and Australia).