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Saudi Aramco and Total Create Refinery Joint Venture
23 June 2008
The Saudi Arabian Oil Company (Saudi Aramco) and Total are establishing a joint venture, the Jubail Refining and Petrochemical Company, with plans to built a 400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia.
The refinery will process Arabian Heavy crude to high–quality refined products that will meet the most stringent global product specifications and is expected to begin operations at the end of 2012. As a full-conversion refinery, Jubail will maximize the production of diesel and jet fuels. In addition, the project will produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer-grade propylene.
The refinery will benefit from its proximity to the Arabian Heavy crude supply system and from the facilities of the Jubail Industrial City such as King Fahad Industrial Port, power and water grids, and residential areas, according to the partners.
The Jubail Refining and Petrochemical Company will be formed during the third quarter of 2008. Saudi Aramco will initially own 62.5% of the company and Total will own the remaining 37.5%. Subject to required regulatory approvals, the parties are planning to offer 25 percent of the company to the Saudi public while the two founding shareholders each intend to retain a 37.5% ownership interest. Saudi Aramco and Total will share the marketing of the refinery’s products.
Saudi Aramco and Total have just released invitations-to-bid for the project’s construction, with a view to awarding all packages during the first quarter of 2009. The first orders for long-lead items will be placed in July 2008 and the project will be introduced to the lending community in the second part of 2008, with a targeted financial close in early 2009.
At a meeting of oil producing and consuming nations this weekend in Jeddah, Saudi Arabia, Australian Resources and Energy Minister Martin Ferguson had called for more diesel refining capacity to help address growing demand.
“Further investment in diesel refining capacity is urgently needed,” Ferguson said. “It is the middle distillate portion of the crude oil barrel... driving the unprecedented growth we are seeing in China, India and the developing world,” the minister said.
June 23, 2008 in Brief | Permalink | Comments (4) | TrackBack (0)
Comments
Posted by: John Taylor | June 23, 2008 at 06:40 AM
This is their answer to us not building more refineries.
There is a need for processing the heavy oil. Iran has heavy oil sitting in tankers because they say people don't want oil because of the amount of effort it takes to process it.
Posted by: Paul | June 23, 2008 at 07:39 AM
____Currently, refinery capacity, that can handle heavy and sour grades, are running almost all out. The remaining spare capacity is largely located in areas with subsidies that make refining crude oil a loss (China).
____Total (refined) oil consumption is dropping in EU and US. The trans-Atlantic trade of gasoline (to US) and diesel (to Europe) supply each market with most of their needs. Thus, most of the refined oil products will go onto the spot market, with the bulk likely going to rapidly developing markets that may have refinery capacity shortages as the demand rises for refined liquid hydrocarbon fuels.
____Many oil exporting countries have massive energy subsidies with an aim to buying social stability and/or encouraging economic growth through low energy costs. This price depression skews consumption towards the energy intensive by decreasing the costs, and encourages wasteful habits and discourages energy efficient economic behavior.
__The fact that Iran's oil industry, due to sanctions that have stalled its oil industry largely with 80's technology, does not have adequate refinery capacity to supply its domestic market with gasoline adds to the demand.
__Hence, once this refinery comes online in 2012, Saudi Arabia and Iran may consume the majority of its 400,000 bbl/day capacity.
_The only caveat would be to convert most of road vehicles, before refinery completion, to run on alternative fuels, of which CNG is the leading option. Such a program is already in place in Iran.
Posted by: allen_xl_z | June 23, 2008 at 10:25 AM
“It is the middle distillate portion of the crude oil barrel... driving the unprecedented growth we are seeing in China, India and the developing world,”
The petro kings are going to simply move to the next market to preserve their kingdom. Unless of course, the global community puts the same pressure on China and India we see on Europe and North America. I kinda doubt it - somehow the "third world" should be allowed to remain dirty.
Posted by: sulleny | June 23, 2008 at 05:27 PM
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Now Saudi Arabian Oil will be sold refined rather than crude. Less jobs in the USA, more money for the Arabs.