JEDDAH, 9 May 2004 — Saudi Aramco has signed an agreement with Japan’s Sumitomo Chemicals for a feasibility study for a $3 billion petrochemical and refining project at Rabigh, 130 kms north of Jeddah.
The project is part of plans to expand Aramco’s refinery there. Sumitomo was one of three companies shortlisted as a potential partner to carry out the studies. The other two were Saudi Basic Industries Company (SABIC) and US’ Dow Chemicals. The project, one of the largest private investments in the Kingdom, will be Aramco’s first foray into the domestic petrochemical sector.
The facility expected to produce an annual 1 million tons of ethylene, a basic ingredient for petrochemical products. The ethylene would be processed from ethane extracted from natural gas. The plant would also produce such plastics as polyethylene used in packaging.
Many Japanese petrochemical firms extract ethylene from naphtha using a thermal process. But the sharp rise in crude oil prices has increased the cost of naphtha. As a result, production costs of ethylene produced from naphtha are four to five times than from ethane.