Saudi Aramco And Pertamina Sign MOU For 300,000 B/D Java Refinery
State oil firm Saudi Aramco and Indonesia’s state-owned Pertamina on 18 February announced a memorandum of understanding (MOU) for a 300,000 b/d refinery and petrochemical complex at Tuban in East Java. The project, if realized, will contribute to Saudi Aramco’s ambitions to almost double refinery capacity in which it has a stake to close to 8mn b/d over the next 10 years.
Saudi Aramco has been bucking the industry trend to divest downstream assets and the Saudi state oil giant has been aggressively expanding its downstream presence, both in-kingdom and overseas, including major new petrochemical initiatives. Asia-Pacific has been a particular focus. Tuban, which will be configured partly to run on Saudi crude, if given the go-ahead, will sell not just to the Indonesian market, but also “elsewhere in southeast Asia,” a Saudi Aramco press release said.
The Saudi firm is adding 1.2mn b/d to domestic refinery capacity by the beginning of 2017 (see table) and also has signed an MOU with China’s state-owned CNPC for a new 200,000 b/d refinery in China’s southwest Yunnan province. But the refinery drive is by no means limited to new-builds. Last year, Korea’s S-Oil, in which Saudi Aramco has a 35% stake, expanded its 565,000 b/d Ulsan refinery to 669,000 b/d. And the 745,000 b/d Saudi Aramco/Shell Motiva joint venture is in process of completing the expansion of its 275,000 b/d Port Arthur refinery to 600,000 b/d – which will see it become the biggest refinery in the US. Speaking in January at the Yasref signing ceremony, Saudi Aramco CEO Khalid al-Falih noted: “Over the next decade our total global refining capacity is expected to approach 8mn b/d as a result of the largest expansion today by any oil company in the world.”
Saudi Aramco is also in the process of doing major upgrades to its 550,000 b/d Ras Tanura, 235,000 b/d Yanbu̍and 122,000 b/d Riyadh refineries as part of its Clean Fuels initiative. All domestic refineries will by 2015 produce better quality 10ppm sulphur gasoline, with Ras Tanura and Riyadh also producing better quality diesel.
The company is also pushing ahead with a major petrochemicals expansion, which is aimed at launching large scale industrialization. Its giant $20bn Sadara joint venture with Dow Chemical is spearheading this effort and the final engineering packages are in the process of getting awarded (MEES, 1 August 2011). But an official green light for a major expansion at Petro Rabigh is still being delayed. A final investment decision (FID) was originally to have been made in late 2010/early 2011, to allow for start-up in 2014. But partner Sumitomo has been lukewarm about the project, with wrangles over the aromatics package posing a major hurdle, sources say. But despite reports to the contrary, there is still strong commitment to the project, MEES understands. A final investment decision on Saudi Aramco’s planned 400,000 b/d refinery at Jazan will only come after the front end engineering and design (FEED) is complete later in the year. But Jazan, in Saudi Arabia’s economically undeveloped south west is a strategic project and is unlikely to be derailed, despite economics which are far from stellar.
Saudi Aramco has kept the price it sells methane and ethane to Saudi utilities and industry at its existing $0.75/mn BTU, MEES understands. The price was to have been revised at the end of last year. New Saudi projects were expected to benefit from a seven-year moratorium (MEES, 1 August 2011), but it is not clear if this moratorium was to extend to existing projects. The company has been pushing for some time for a hike to the current ultra-low prices to reflect the higher costs of new Saudi gas supply, which is predominately set to come from more expensive offshore and non-associated gas fields.
Saudi Aramco Downstream Expansion Projects(‘000 b/d)
Refinery | Partner | Capacity | On Stream | Est Cost ($bn) |
Motiva, Port Arthur Refinery Expansion | Shell 50% | 325 | Imminent | N/A |
Satorp, Jubail export refinery | Total 50% | 400 | 2H13 | 12.5 |
Yasref, Yanbu̍export refinery | Sinopec 50% | 400 | 4Q14 | 10 |
Sadara, Jubail II | Dow Chemical | 3mn t/y | 2016 | 20 |
Petro Rabigh II | Sumitomo | 2.5-3mn t/y | FEED | 8-9 |
Jazan | 400 | 4Q16 | 7-8 | |
Yunnan | CNPC | 200 | MOU | N/A |
Tuban | Pertamina | 300 | MOU | N/A |
Copyright MEES 2012.
