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Saudi downstream programmes gain traction

13 September 2024

Progress on a programme as mammoth as Saudi Aramco’s liquids-to-chemicals scheme is expected to be measured and laboured. The programme’s central ambition is to derive greater economic value from every barrel of crude produced in the kingdom by converting 4 million barrels a day (b/d) of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

Aramco and its subsidiary, Saudi Basic Industries Corporation (Sabic) – the two primary stakeholders of the liquids-to-chemicals programme – are still in the initial phase and are giving shape to various projects and components.

Considering that the operators are “still working out” how best to attain the liquids-to-chemicals conversion goal from across their global portfolio, achieving “cohesion and synergies” with the consultants they have appointed during the conceptualisation phase is proving to be a “sticking point”, several sources told MEED.

While day-to-day progress might appear sluggish, Amin Nasser, Aramco’s president and CEO, assured earlier in the year that the Saudi energy giant is on track to achieve its crude oil-to-chemicals (COTC) conversion goal by 2030.

“We are on track to achieve our target of 4 million b/d liquids-to-chemicals [conversion capacity] by 2030,” Nasser said during an online press conference held on 30 May to discuss Aramco’s secondary shares offering.

“We’re slightly above 2 million b/d liquids-to-chemicals [output], so progressing very well in our programme,” he said in response to a question by MEED during the media briefing.

Liquids-to-chemicals programme

When completed, the liquids-to-chemicals programme will make Saudi Arabia one of the world’s largest petrochemicals producers. Aramco, along with Sabic, have been tasked with establishing 10-11 large mixed-feed crackers by 2030. These petrochemicals crackers, which include greenfield developments and expansions of existing facilities, will be built both in Saudi Arabia and in overseas markets.

The Saudi energy giant is said to have been allocated a total capital expenditure budget of up to $100bn for projects as part of this campaign, MEED has previously reported.

Aramco has divided its liquids-to-chemicals programme in Saudi Arabia into four main projects. It took a major step forward in September last year by appointing project management consultants (PMC) for the different segments of the scheme.

Aramco selected US firm KBR, France’s Technip Energies, UK-based Wood Group and Australia-headquartered Worley to provide PMC services for the four projects, which include: 

  • Project East (PMC 1) – involves converting the Saudi Aramco Jubail Refinery Company (Sasref) complex in Jubail into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery. China’s Rongsheng Petrochemical Company recently signed a preliminary agreement with Aramco to potentially become a 50% investor in this project.
  • Project West (PMC 2) – involves converting the Yanbu Aramco Sinopec Refining Company (Yasref) complex in Yanbu into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. Aramco and state-owned China Petroleum & Chemical Corporation (Sinopec) signed a memorandum of understanding in October for joint investment in the project, known as the Yanbu Refinery+ project.
  • Project X (PMC 3) – involves converting the Saudi Aramco Mobil Refinery Company (Samref) complex in Yanbu into an integrated refinery and petrochemicals complex by building a mixed-feed cracker. 
  • Project RTC (PMC 4) – involves establishing a COTC complex in Ras Al-Khair in the Eastern Province. Sabic is a partner in the Ras Al-Khair COTC project.

Aramco has initiated a separate tendering exercise to provide front-end engineering and design (feed) services on the projects in the future. Feed contracts are scheduled to be awarded in 2024, while the main EPC contracts are due for award in 2025.

Ramping up gas processing capacity

To process incremental volumes of gas entering the grid due to Aramco spiking its conventional and unconventional gas production, the state enterprise has already spent $16.5bn on gas processing and transportation projects this year.

In April, Aramco awarded $7.7bn in EPC contracts for a project to expand the Fadhili gas plant in the Eastern Province of Saudi Arabia. The project is expected to increase the plant’s processing capacity from 2.5 billion cubic feet a day (cf/d) to up to 4 billion cf/d.

On 30 June, Aramco awarded 15 lump-sum turnkey contracts for the third expansion phase of the Master Gas System (MGS-3), worth $8.8bn. Aramco has divided EPC works on the MGS-3 project into 17 packages. The first two packages involve upgrading existing gas compression systems and installing new gas compressors. The 15 other packages relate to laying gas transport pipelines at various locations in the kingdom.

The expansion will increase the size of the network and raise its total capacity by an additional 3.15 billion cf/d by 2028 through installing about 4,000 kilometres of pipelines and 17 new gas compression trains.

Going forward, Aramco is expected to pursue other projects this year to boost the gas processing potential of its key plants, such as Haradh, Shedgum and Uthmaniya.

Aramco has already received interest from contractors for the main tender for a project to expand the Haradh Gas Oil Separation Plant 3 (GOSP 3). The state enterprise is in the feed stage of a separate project to expand the Shedgum and Uthmaniya plants, with the main EPC tender expected to be issued by the end of the year.

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Indrajit Sen

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