JGC Corporation to Conduct Feasibility Study for Petro Rabigh Expansion in Saudi Arabia

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Researched by Industrial Info Resources (Sugar Land, Texas)--The state-owned national oil company of Saudi Arabia, Saudi Arabian Oil Company (Saudi Aramco) (Dhahran) and Sumitomo Chemical Company Limited (TYO:4005) (Tokyo, Japan) have announced that the Japanese JGC Corporation (TYO:1963) (Tokyo) has been selected to conduct a feasibility study for the expansion of the Petro Rabigh refining and petrochemical complex in Saudi Arabia. The study will be conducted under a cost-reimbursable contract.

Saudi Aramco and Sumitomo joined forces in 2005 to form the joint venture Rabigh Refining & Petrochemical Company (SAU:2380) (Rabigh, Saudi Arabia) to add a petrochemical complex to an existing refinery with a production capacity of 400,000 barrels per day (BBL/d). In April of this year, the company signed a memorandum of understanding to conduct the feasibility study for the Rabigh II project, as it is to be known. Completion of the feasibility study is scheduled by the third quarter of 2010, following which a decision will be taken on the expansion of the complex.

The proposed Rabigh II project is a major expansion of the Rabigh petrochemical complex, designed to complete the development of what will become a world-class complex, producing a diverse range of petrochemicals, some of which will be new to Saudi Arabia. When complete, the complex will be one of the world's largest integrated refining and petrochemicals facilities. JGC was successful in completing the major facilities for the first phase of the Rabigh project, known as Rabigh I, which included a fluid catalytic cracker and an ethane cracker.

The feasibility study of Rabigh II will examine the viability of expanding the existing ethane cracker to add an extra 30 million standard cubic feet of ethane feedstock per day as well as the construction of a new aromatics plant using up to 3 million tons per year of naphtha. The study will also investigate the viability of the construction of new units to produce high-value and special petrochemical products, such as polyols, caprolactam, acrylic acid and nylon-6. An important part of the feasibility study will be the determination of the investment amount required to achieve the above results.

In May of this year, the $10.3 billion, 3,000-acre Rabigh I complex became operational, with a shipment of 19,200 tons of monoethylene glycol, a coolant and antifreeze solvent, to China. When fully operational, the complex will consist of 23 plants producing 18.4 million tons annually of petroleum-based products (including naphtha, kerosene, diesel, fuel oil and gasoline), 1.3 million tons annually of ethylene and 900,000 tons of propylene based derivatives. In July, the complex expects to begin production of high-octane gasoline, with an eventual production capacity of 60,000 BBL/d from fuel oil.

Products from the Rabigh complex will be used in numerous applications around the globe, including plastics, coolants, lubricants, paint, carpet, insulation, household appliances and much more. Much of the gasoline production from the complex will be used by the domestic market, leading to fears that lower export opportunities to Saudi Arabia will adversely affect companies hoping to offset the lower demand in the U.S caused by the economic global downturn.

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