PETROCHEMICALS

HUGE GLOBAL DEMAND RAISES STAKES FOR SAUDI PETROCHEMICAL

Saudi Arabia accounted for around 80% of the Gulf region’s petrochemical production capacity, according to the Gulf Petrochemicals & Chemicals Association (GPCA).

Overall, the GCC represented 6.7% of the global chemicals industry in 2021, and generated USD 95.9 billion in industry revenues—the highest level in eight years.

The kingdom is looking to boost its petrochemical sector.

Petrochemical projects will constitute the majority of the upcoming oil and gas projects, which are expected to commence operations in Saudi Arabia between 2023 and 2027, accounting for around 61% of the total projects, according to GlobalData.

The research firm also noted that “petrochemical projects are expected to witness the highest project starts in Saudi Arabia (44), followed by midstream (13), upstream (fields), and refineries with 11 and four, respectively”. Of the 44 petrochemical projects that are expected to start operations in the country by 2027, 36 are likely to be new builds and the remaining are expansion projects.

“Petrochemicals continue to gain prominence in Saudi Arabia as part of its liquids-to-chemicals strategy, which is aimed at reducing dependence on the upstream sector, diversify its economy, and create additional employment opportunities. The country has huge potential to convert its liquids into chemicals through advanced technologies and support a viable circular economy,” said Himani Pant Pandey, oil and gas analyst at GlobalData.

Among upcoming petrochemical projects in Saudi Arabia by 2027 is the Saudi Aramco Total Refining and Petrochemical Company Al-Jubail Ethylene Plant, with a capacity of 1.50 million tonnes per year (tpy) and costing USD 2.7 billion. The plant will provide feedstock to other petrochemical and specialty companies in the Jubail industrial city. Pandey concludes: “The state-owned companies of Saudi Arabia and China – SABIC, Aramco, and Sinopec – have recently announced plans to increase their collaboration in refinery and petrochemicals sectors. The collaboration helps to further advance the downstream sector in both countries and provides a stable market for Saudi Arabia for its oil and petrochemicals.”

  

NEW PRODUCTS

Saudi Arabia is expanding its petrochemical product portfolio. In May,

Japan received its first shipment of independently certified low-carbon ammonia for use as fuel in power generation. It represents another milestone in the development of this lower-carbon energy solution. 

“The shipment is the result of a successful multiparty collaboration across the low-carbon ammonia value chain. The ammonia was produced by SABIC Agri-Nutrients with feedstock from Aramco, and sold by Aramco Trading Company to the Fuji Oil Company,” according to the partners. “Mitsui O.S.K. Lines was tasked with shipping the liquid to Japan, then the low-carbon ammonia was transported to the Sodegaura Refinery for use in co-fired power generation, with technical support provided by Japan Oil Engineering Co.”

The ammonia is categorised as low carbon because CO2 from the associated manufacturing process was captured and utilised in downstream applications.

In 2020, Aramco collaborated with SABIC to dispatch the world’s first shipment of low-carbon ammonia to Japan in a demonstration project. Then in 2022, Aramco and SABIC received the world’s first independent accreditation for low-carbon hydrogen and ammonia products. By the end of that year, the two companies had delivered the world’s first accredited low-carbon ammonia shipment to South Korea. The latest shipment to Japan brings this lower-carbon energy solution one step closer to the mainstream.

Ensuring that it is near its key Asian customers, Aramco began work earlier this year on a major integrated refinery and petrochemical complex being developed by Huajin Aramco Petrochemical Company (HAPCO). This joint venture between Aramco (30%), NORINCO Group (51%), and Panjin Xincheng Industrial Group (19%) is developing the complex in the city of Panjin, in China’s Liaoning Province.

Aramco will supply up to 210,000 barrels per day (bpd) of crude oil feedstock to the facility, which is expected to be up and running by 2026.

In March, Aramco also signed agreements to acquire a 10% interest in Shenzhen-listed Rongsheng Petrochemical Co. Ltd. for USD 3.6 billion. Combined, the partnership with Rongsheng and the HAPCO joint venture would see Aramco supply a total of 690,000 bpd of crude to high chemical conversion assets in China, in line with its strategy of converting four million bpd of crude to chemicals by 2030. As part of the deal, Aramco would supply 480,000 bpd of Arabian crude oil to Rongsheng affiliate Zhejiang Petroleum and Chamical Co. Ltd, under a long-term sales agreement.