Saudi Aramco, Sumitomo Award Engineering Services Contract to KBR for Rabigh II Petrochemical Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--Engineering, construction and service company KBR Incorporated (NYSE:KBR) (Houston, Texas) has been awarded a contract for basic engineering and associated services for KBR's phenol technology for the Rabigh II project in Saudi Arabia.

The contract was awarded by Saudi Aramco (Dhahran, Saudi Arabia), the state-owned national oil company of Saudi Arabia, and Sumitomo Chemical Company Limited (TYO:4005) (Tokyo, Japan).

The contract is the second to be awarded to KBR in Saudi Arabia in the last two months. In November this year, KBR announced that it had been awarded a contract by Saudi Kayan Petrochemical Company Limited (SAU:2350) (Al Jubail, Saudi Arabia), an affiliate of Saudi Basic Industries Corporation (SAU:2010) (SABIC) (Riyadh, Saudi Arabia), to design and implement an operator-training simulator for a grassroots phenol plant in Saudi Arabia.

In a statement issued by KBR, Tim Challand, the company's president, said: "We look forward to building on our existing technology portfolio in the Middle East market. Upon successful completion of the feasibility study, we also look forward to providing our innovative phenol technology to the project."

Saudi Aramco and Sumitomo joined forces in 2005 to form joint venture Rabigh Refining and Petrochemical Company (SAU:2380) (Petro Rabigh) (Rabigh, Saudi Arabia), to add a petrochemical complex to the existing refinery, with a production capacity of 400,000 barrels per day. In May 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.

On April 20 this year, Saudi Aramco and Sumitomo signed a memorandum of understanding to conduct a feasibility study for a major expansion of the complex, and on June 23 announced the appointment of JGC Corporation (TYO:1963) (Tokyo) to conduct the study.

The feasibility study, expected to be completed by the third quarter of next year, will determine the viability of the expansion project and the investment amount required to achieve the proposed expansion. The Rabigh II project is the next stage in the development of the facility into a world-class petrochemical complex and is designed to produce a range of products to complement those produced by Rabigh I.

The plans for the Rabigh II expansion include an expansion of the existing Rabigh I ethane cracker by a capacity of 30 million cubic feet of ethane feedstock per day, and the construction of a new aromatics complex that will use up to 3 million tons per year of naphtha as feedstock.

The products proposed to be produced by Rabigh II include those of a higher value and specialty, many of which will be new to the Kingdom. Among these are acrylic acid, caprolactum, cumene, phenol/acetone, ethylene propylene rubber, methyl methacrylate, and poly methyl methacrylate.

Following completion of the feasibility study, Saudi Aramco and Sumitomo will finalize the technology licensing agreements and work toward a startup planned for the third quarter of 2014.

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