MOSCOW (MRC) -- Saudi Aramco and France's Total are considering building a mixed-feed cracker and derivatives in Jubail, near their joint refining complex, reported Hydrocarbonprocessing with reference to industry sources.
The cracker is expected to have a capacity of 1.5 MMtpy, said a source familiar with the plans, who described them as at an initial stage.
The feedstock would partially come from SATORP, the existing Aramco-Total joint refining venture, and from Sadara, a joint venture between Aramco and Dow Chemical, also in Jubail.
Sadara operates a mixed-feed cracker, the first in Saudi Arabia.
The idea of the cracker has been raised before. In 2010, an executive from Total Petrochemicals, a unit of Total, said it could be the largest possible, typically 1,500 KTA of ethylene and 500 KTA of propylene, plus derivatives.
"It is a greenfield project, they have launched the bidding for the feasibility study," said one of the sources, adding the study did not include a refinery expansion.
He estimated the cost of the project known as Amiral to be around USD3 B, while another source said the cost of the cracker and other downstream units was expected to be around USD5 B.
Despite having massive natural gas reserves, Saudi Arabia is short of gas supplies as the majority of its gas reserves are associated with oil, said energy consultant Sadad al-Husseini, a former senior executive at Aramco. Saudi Arabia is currently restricting oil output as part of an international agreement.
"There remains of course the potential for more gas discoveries as the kingdom's shale gas exploration program gathers momentum," he said, adding the availability of ethane would be key to the overall economics of the project.
Saudi Aramco plans to double its gas production in a decade, including shale that will add around 2 Bcf–3 Bcf to the mix.
But the kingdom is encouraging the petrochemicals industry to include more liquid feedstock to diversify and become less vulnerable to price fluctuations.
For instance, Aramco plans to develop a project with Saudi Basic Industries Corp (SABIC) with a new technology that converts crude oil to chemicals by limiting extensive refining.
A second source said SATORP had issued a tender for pre-feed engineering and design to upgrade its production of aromatics, with an award of that contract seen by the Q2 2019.
Saudi Aramco declined to comment, while a spokeswoman for Total said the company was still interested in developing petrochemicals units downstream of SATORP's refinery, which already produces some petrochemicals products: paraxylene, benzene and propylene.
"It is consistent with our strategy of investing in our major integrated refining and chemicals platform and capitalizing on advantaged feedstock," the Total spokeswoman said, adding: "the main issue is the gas feedstock allocation."
The two companies have already been operating the 400,000 barrels per day SATORP refinery integrated with petrochemical production and have considered expanding petrochemicals output for several years.
In 2015, Total said partners would need to solve the issue of obtaining natural gas supplies before moving on to detailed studies of the project.
In February last year, a Total executive said the two companies were considering expanding the refining capacity of the project by 10%.
Saudi Aramco owns 62.5% of SATORP and Total 37.5%.
Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.