JEDDAH, 6 April 2005 — Saudi Aramco plans to build a multibillion dollar export-oriented refinery with a 400,000 barrel-per-day (bpd) capacity in the Red Sea city of Yanbu.
This was disclosed by Khalid Al-Buainain, vice president of refining at Aramco, to reporters at an energy conference in Dubai.
Investment for the plant will run to $4 billion-$5 billion, he said.
Saudi Aramco wanted to form a joint venture with one or more international partners for the facility, he said. “We are talking across the globe to all refiners,” he said, adding that the deal should be finalized “within a year or so.”
A lack of global refining capacity to meet growing fuel demand in the United States and Asia has helped push oil prices to record highs this year. Yanbu is strategically located and the new refinery could supply the US East Coast with high-quality gasoline, low-sulfur diesel to Europe and naphtha to East Asia, Al-Buainain said.
The proposed refinery will run on a diet of heavier quality crude, he said.
India’s Hindustan Petroleum Corp. Ltd. (HPCL) has held “preliminary talks” for a stake in the new Yanbu refinery, HPCL Chairman M.B. Lal was quoted as saying yesterday. HPCL has also offered Saudi Aramco a stake in its Vishakhapatnam refinery which will double capacity to 300,000 bpd in three years, Lal said. Lal visited Saudi Arabia with India’s Oil Minister Mani Shankar Aiyar late last month.
Aramco has two joint-venture partners in the Kingdom’s refining sector. It operates the 320,000-bpd Sasref refinery at Jubail with Royal Dutch Shell, and the 400,000-bpd Samref refining complex at Yanbu with ExxonMobil Corp.
The Kingdom is planning to invest billions of dollars in its refinery system, which can process 2.1 million bpd of crude.
Its existing refinery assets can handle 450,000 bpd of heavy crude, although the system is actually running less than 100,000 bpd of heavier grades, Al-Buainain said.
Total capital expenditure for expanding and upgrading existing plants over the next five years is around $1.5 billion-$2.0 billion. Aramco was also considering revamping its Ras Tanura refinery at a cost of around $4 billion-$5 billion and adding a petrochemical complex, Al-Buainain added.
Aramco and Japan’s Sumitomo Chemical Co. Ltd. are investing $6 billion-$7 billion to upgrade the Rabigh refinery and also build a petrochemical plant by 2008.
Indian Oil Ministry officials say Aramco is in talks with state-run Indian Oil Corp. for a stake in IOC’s 180,000-bpd Paradip refinery, which is likely to be built by 2010.
“They are very keen to involve Indian firms in the new refinery and we want to invest in Saudi Arabia to strengthen our relationship. We depend heavily on Saudi crude oil,” an official said.
Meanwhile, Hussain Sultan, chief executive and board member of Emirates National Oil Company, addressing the energy conference said that the Middle East will continue to be a major oil industry player and will be the key supplier to the growing Chinese market.
Sultan said demand for oil continues unabated despite record crude prices and the falling value of the dollar.