Page 13 - MEOG Week 42

MEOG PROJECTS & COMPANIES MEOG

Aramco reels in OTC project

SAUDI ARABIA SAUDI Aramco and its newly-acquired petro- crude-to-chemicals scheme has been adjusted
chemicals arm SABIC are looking to downsize a since the coronavirus (COVID-19) pandemic
plan to build a $20-30bn oil-to-chemicals com- started.
plex in the kingdom’s western port city of Yanbu. Aramco, despite boasting the lowest oil pro-
Aramco and Sabic agreed on the project in duction costs in the world, still saw its profits
November 2017, estimating it would process slump 73%in the second quarter to SAR24.6bn
400,000 barrels per day (bpd) of crude to pro- ($6.6bn) as a result of the collapse in prices.
duce 9mn tonnes per year of chemicals and base In August it announced it would slash its cap-
oils. That would make the complex the largest of ital expenditure for 2020 from $25-30bn to
its kind in the world. It is due to start up in 2025. $20-25bn.
However, the pair said on October 18 they The national oil company (NOC) completed
were considering integrating Aramco’s existing its $69bn acquisition of a 70% stake in SABIC
refineries in Yanbu with a mixed feed steam from Saudi Arabia’s sovereign wealth fund in
cracker and derivative olefins units. The scope June, as part of an ambitious downstream push.
is being reassessed “to maximise the economic But the deal has increased its exposure to what is
value while evaluating the optimal technical currently a very bearish market.
options and market risks,” SABIC said in a filing Even before the pandemic, prices for pet-
on the Saudi bourse on October 18. rochemicals goods were falling amid weak-
The shift in plans comes as oversupply er-than-expected growth in key markets and
on the oil and petrochemicals markets have new supply coming on stream.
forced operators in both areas to re-evaluate SABIC suffered its third quarterly loss in a
production projects. It marks the first time the row in the three months ending June 30.™

TENDERS

Services firms submit bids for Jafurah work

SAUDI ARABIA FOUR international services firms are under- In August, Aramco’s president and CEO
stood to have submitted bids to Saudi Aramco Amin Nasser said: “Gas is a growth area for us,
for work on its $110bn project to develop uncon- especially considering increasing gas demand
ventional gas at the onshore Jafurah field. in the kingdom. The Northern area is declining,
Last week, sources told Upstreamonline that but there is pick-up in the Eastern province, the
Larsen & Toubro of India, Italy-based Saipem, Jafurah Basin and South Ghawar in conventional
JGC of Japan and South Korean firm Hyundai gas.”
Engineering & Construction had all submitted Under the preliminary $110bn plans, Ara-
technical and commercial bids for a ‘compres- mco intends to kick off production in early 2024
sion package’, with the winner expected to be and achieve 2.2bn cubic feet (62 mcm) per day of
announced by the end of the year. sales gas by 2036. It is also anticipated to produce
Work will cover three gas compression around 550,000 bpd of NGLs and condensates.
plants catering to 600mn cubic feet (17mn cubic The first phase is seen producing 1.1 bcf per
metres) per day of gas and 150,000 barrels per day of raw gas, which will be processed at a facil-
day (bpd) of NGLs and condensates. ity, the construction of which is currently out for
In February, Aramco announced that it had tender.
received regulatory approval from the Ministry Middle East Oil & Gas (MEOG) understands
of Energy to proceed with the expansion of the that while work has been ongoing at Jafurah
Kingdom’s unconventional gas production capa- throughout the COVID-19 pandemic, the asset’s
bilities. The main focus of the initiative is Jafurah, timeline has been pushed back slightly by the
which holds an estimated 200 trillion cubic feet company’s massive capex reduction, but only by
of gas (5.7 trillion cubic metres), around half of a matter of months.
which is comprised of liquids. The field is Saudi The awards for two contracts tendered – one
Arabia’s largest deposit of unconventional gas. for processing facilities and the other for sul-
With Riyadh keen to reduce the approxi- phur recovery units – earlier this year are also
mately 3-3.5mn bpd of Saudi crude that is burnt expected to be made alongside that of the com-
at home to provide electricity, it appears that the pression package following delays because of the
gas push has not lost momentum despite the pandemic. Korean firms Samsung Engineering
calamitous oil price war at the start of the year and Hyundai E&C are understood to have sub-
and the collapse in demand caused by the coro- mitted Aramco’s favoured bids for the deals,
navirus (COVID-19) pandemic. which are worth a combined $2bn.™

Week 42 21•October•2020 www. NEWSBASE .com P13