RIYADH/DHAHRAN: Saudi Aramco and France’s Total said yesterday that they would invest SR36 billion to build the Jubail oil refinery.
“The refinery is now expected to be fully operational by the second half of 2013,” said Khalid Al-Falih, chief executive of Saudi Aramco, in a statement. “Today we are marking a major milestone in our partnership with Total, which has been strong historically but is now stronger than ever.”
The two companies have set up the joint venture Saudi Aramco Total Refining and Petrochemical Company” (SATORP) to build and operate the refinery.
SATORP has finalized the awarding plan for engineering, procurement and construction contracts that constitute the 13 different process packages of their Jubail joint venture refinery, following a meeting of the SATORP board of directors.
The two companies announced that Technip and Tecnicas Reunidas would be among the main contractors to execute this project. The details have been finalized for the 400,000 barrel per day joint-venture refinery, which was to be operational by 2011 but postponed for a while as the two companies sought to cut costs.
“Today, we have passed an important milestone, which shows the quality of the strategic partnership between our two companies and their determination to bring off such a far-reaching project, even in a weaker economic environment,” said Total CEO Christophe de Margerie. “As a result, we will be able to meet, from 2013, the increasing demand for high-quality refined products from Asia and the Middle East.”
Al-Falih said the timely implementation of this project would ensure that global and regional markets would be well supplied with high quality products in the next decade.
“Our commitment to fund a project of this scale demonstrates our confidence that energy markets will grow in the years to come, and our confidence that the Kingdom is the ideal location for energy investments by global investors,” Al-Falih added.
Saudi Aramco and Total will ultimately each own 37.5 percent of SATORP, while Aramco plans to offer the remaining 25 percent to the Saudi public in an IPO during the last quarter of 2010.
Commenting on the deal, French Embassy spokesman Jean-Claude Daupeyroux, said: “This also symbolizes the long-lasting cooperation between Aramco and Total on the one hand and between Riyadh and Paris on the other.”
Once operational, the Jubail refinery will produce diesel and jet fuels, as well as 700,000 tons per year of paraxylene, 140,000 tons per year of benzene and 200,000 tons per year of polymer-grade propylene.
The awarding of the contracts related to the project marks an important step in the execution of this 400,000 barrel per day full-conversion refinery.
When completed, the export refinery will be one of the most advanced refineries in the world and will process Arabian Heavy crude to products fulfilling the most stringent specifications to meet rising demand for environmentally friendly fuels.
A portion of Jubail refinery’s production will be consumed locally to meet spikes in domestic demand. Domestic refineries, such as the Jubail joint venture, have the location advantage to effectively and efficiently supply both international and domestic demand.
The synergies between Saudi Aramco and Total lie in the fact that both companies bring knowledge and expertise to the joint venture company.
The project adds value to the local economy through job creation and opportunities for further downstream investments by local businessmen. It is estimated that the refinery will create approximately 1,200 direct employment opportunities in the Kingdom, each of which typically creates five to six indirect job opportunities.
The executive committee of Total and the board of directors of Saudi Aramco decided to launch the project on May 6 and May 8 last year and on June 22 the two companies signed a “shareholder agreement” in Jeddah. SATORP was formed during the third quarter of 2008.
