Saudi Aramco, SABIC sign deal with Britain’s 'Wood Group' to develop world’s largest crude oil to chemicals project

Wood Group will develop the $20 billion complex and provide front-end engineering design and project management services during the engineering, procurement and construction phase. (Shutterstock)
Updated 09 March 2018
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Saudi Aramco, SABIC sign deal with Britain’s 'Wood Group' to develop world’s largest crude oil to chemicals project

DUBAI: Oil giant Aramco and petrochemicals manufacturer SABIC selected on Thursday British energy services provider Wood Group to develop the world’s largest fully integrated crude oil to chemicals (COTC) complex in Saudi Arabia.
Wood Group will develop the $20 billion complex and provide front-end engineering design and project management services during the engineering, procurement and construction phase.
The energy service provider will also support the development of the complex that is expected to process 400,000 barrels a day and around 9 million tons of chemicals and base oils annually.
The agreement coincided with the visit of Saudi Crown Prince Mohammed bin Salman to the United Kingdom. It also follows the signing of a Memorandum of Understanding in November 2017 between Saudi Aramco and SABIC to assist in bringing the mega-project to its next stage of development.
The scope of the contract primarily includes the finalization of the project, selection of technology providers, updating project economics and performing the front-end engineering design.
The project is expected to achieve a direct conversion rate from crude oil to chemicals of almost 50 percent.
“This offers the Kingdom solid opportunities to produce chemicals as a feedstock as part of Saudi Aramco’s efforts to maximize return on investments in hydrocarbon resources,” President and CEO of Saudi Aramco, Amin H. Nasser said.
“This is an important milestone in a partnership that we are proud of between Saudi Aramco and Sabic, a partnership that is in line with Saudi Aramco’s strategy for business integration, adding value and tackling global growth opportunities in chemicals,” he added.
It will be capable of maximizing chemical yield, recycling by-products, optimizing resources and driving efficiencies of scale, Nasser explained.
“Ours is a business relying on finite natural resources for our feedstock. We have an obligation to deploy those resources as efficiently and in the most sustainable manner possible,” Vice Chairman and CEO of SABIC Yousef Al-Benyan said.
The project will generate the world’s highest proven yield conversion rate of oil to chemicals in a competitive and sustainable way, according to Al-Benyan.
The contract is expected to continue through to the start of operations in 2025.
By 2030, the COTC complex is expected to be a significant contributor to Saudi Arabia’s GDP and play a key role in helping the continued economic diversification from crude exports to higher value industrial products.


Oil prices climb as Saudi capacity cushions impact

Updated 20 September 2019

Oil prices climb as Saudi capacity cushions impact

  • Kingdom pledges return to capacity by end of November as Kuwait strengthens security for oil sector

LONDON: Oil prices gained on Thursday, supported by supply risks as the market assesses the fallout from last weekend’s drone attacks on Saudi oil
infrastructure.

Brent crude futures gained $1.78 to $63.80 a barrel, while US West Texas Intermediate crude was up $1.28 at $58.40 a barrel.

The attacks knocked out around half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.

“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

HIGHLIGHTS

• US to impose more sanctions on Iran.

• Cushing stocks at lowest since October, 2018.

• Global excess capacity at low level.

The Kingdom said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months,” consultancy Energy Aspects said.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by Iran.

US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.

Iran warned President Trump against being dragged into all-out war in the Middle East.

US Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait’s oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said.

Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.

Stockpiles of crude in the US the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.