Jan 20 2010 |
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Aramco to build Jizan petchem plant
RIYADH - Saudi Arabia Oil Company "has been commissioned to build Jizan refinery as soon as possible, Minister of Petroleum and Mineral Resources Ali Al-Naimi said on Tuesday.He said tht following the royal directives to consider the establishment of a refinery in Jizan region, the ministry had immediately floated the tenders for the project.
Eight Saudi companies have been short-listed. They and 42 other international oil companies had been invited to form consortiums, with each consortium having at least one or more global companies invited for the bidding.
The project would cost at least $10 billion, the source said. The Saudi oil ministry received two bids to build, own and operate the refinery in a tender that expired on Nov. 7.
The Jizan refinery, which would have a capacity of 250,000 to 400,000 barrels per day of crude, would be the first Saudi oil refinery to be 100 percent privately-owned.
Refineries elsewhere in the Kingdom are fully owned by Saudi Aramco , or by joint ventures between Aramco and international energy firms.
"The (oil) ministry's permit is to build a refinery, but the economic feasibility studies of the project suggest that it would be better to include a petrochemical plant," a source familiar with the bidding process said. "But they must choose well which products they are going to produce." The best option for a feedstock for the plant would be naphtha produced at the oil refinery, he said. A combined refinery and petrochemical plant would make more profit than a simple refinery.
Saudi Arabia is developing its petrochemical industry and aims to make it one of the world's largest. The Kingdom has a rapidly rising domestic gas demand, so it aims to boost its petrochemical production by adding new plants which will rely less on gas and more on oil products for feedstock.
Aramco plans to develop major integrated refinery-based chemical complexes through joint ventures with US Dow Chemical in Ras Tanura, with France Total in Jubail, and US ConocoPhillips in Yanbu.
The Kingdom aims to boost petrochemical output to 80 million tons per year in 2015 from 60 million tons.
Saudi industrial group Tasnee, Saudi Nama Chemicals Group and Saudi Advanced Refineries and Petrochemicals Co (ARPC) formed one of the consortiums that bid for Jizan.
Corral Petroleum Holdings AB teamed up with Jeddah-based Arabian Peninsula Co for Industrialization and Oil Services in a second consortium, sources aware of the matter said.
Corral, a Swedish-registered firm and Arabian Peninsula are both owned by Mohammed Al-Amoudi.
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