Sumitomo, Saudi Aramco Prepare Phase II of Rabigh Petrochemical Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--As the feasibility study comes to an end, the scheduled kickoff for Phase II of the Rabigh Petrochemical Complex draws closer. Phase I recently began operations at the Rabigh Industrial Zone, which is about 400 kilometers west of Riyadh, in the Makkah province. The complex is owned by Rabigh Refining and Petrochemical Company (PetroRabigh), a 50:50 joint venture of Saudi Aramco (Dhahran, Saudi Arabia) and Sumitomo Chemical Company Limited (TYO:4005) (Tokyo, Japan), and incorporates its own industrial city. The project is valued at $10 billion and has a capacity of more than 2 million tons per year of petrochemicals and 18 million tons per year of refined products. Saudi Aramco supplies the operation with crude oil, ethane and butane, which is processed by the world's largest high olefins fluid catalytic cracker and an ethane cracker.

In spring of this year, Saudi Aramco and Sumitomo signed a memorandum of understanding to continue PetroRabigh and commence with plans for Phase II of the petrochemical complex. In June, the joint venture selected JGC Corporation (TYO:1963) (Yokohama, Japan) to head engineering and project management in June. JGC was responsible for project management during Phase I construction of the complex. Shortly after awarding JGC the contract, Aramco and Sumitomo brought KBR Incorporated (NYSE:KBR) (Houston, Texas) on board. KBR will manage basic engineering and has agreed to supplying technology, particularly technology regarding phenol.

High demand for petrochemicals and refined products in China has been the primary drive for the $6.5 billion-plus Phase II expansion. Gasoline is in high demand, as well as petrochemicals for plastics, the automobile industry, and appliances, amongst numerous other applications. The expansion is scheduled to begin at the beginning of 2012 and will be broken into seven construction packages to be completed in the beginning of 2015. No specifics regarding the size of the expansion have been released. However the joint venture has hinted that the high olefins fluid catalytic cracker's capacity to process feedstock will be increased by an additional 30 million tons per year. Sumitomo and Aramco are expecting bid tenders to begin before the end of the 2010.

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