The industrial city of Jubail in Saudi Arabia is burnishing its credentials as the region's leading downstream hub after securing an investment pledge from global petrochemical giant Ineos.
Ineos yesterday announced plans to build three new plants at the Jubail 2 complex, in what will be its first investment in the Middle East. The $2bn investment, through an initial deal with state-owned Saudi Aramco and Total, will form part of the planned $5bn Project Amiral complex at Jubail.
Its investment will cover a 425,000 t/yr acrylonitrile plant, the first of its kind in the Middle East, as well as a 400,000 t/yr Linear Alpha Olefin (LAO) plant and associated world-scale Poly Alpha Olefin (PAO) unit. All three plants are scheduled to start production in 2025.
The facilities will produce the key building blocks for carbon fibre, engineering polymers and synthetic lubricants, which Ineos said are pivotal to economic growth in the region.
Diversification
Saudi petrochemical production is likely to hit around 120m t in 2019, with a significant majority of plants located in the Jubail area.
The country has been pushing to diversify its downstream product suite in line with the Saudi Vision 2030 project spearheaded by crown prince Mohammad bin Salman. And it is shifting its focus from commodity petrochemicals to specialty products at a time when Riyadh is also looking to lower its dependence on crude oil.
Samac, a joint venture between Saudi petrochemical giant Sabic and Japan's Mitsubishi, started production of methyl methacrylate (MMA) and polymethyl methacrylate (PMMA) last year, in line with the Saudi push into more downstream products.
Jubail is also home to Sadara, the world's largest chemical complex built to be built in a single phase, with 26 integrated manufacturing plants. Sadara, a joint venture between Aramco and US firm Dow Chemical, is ramping up production at Saudi Arabia's first isocyanates and polyols plants.
Other producers with facilities in Jubail include Aramco, Sabic and its many affiliate companies, fellow Saudi firms Tasnee, Sipchem, Chemanol and Advanced Petrochemical, and the Saudi Chevron joint venture.
Location
Jubail, in Saudi's eastern province, benefits from access to subsidised feedstock, skilled labour and excellent port facilities. But rising geopolitical tensions have also highlighted its proximity to Iran and the threat of disruptions to supply chains should security deteriorate.
These concerns were heightened last month when four vessels, including two Saudi very large crude carriers (VLCCs), were victims of "sabotage" off the coast of Fujairah, a UAE bunkering hub.
The attacks further raised tensions between Saudi Arabia and Iran, with shipping companies sounding out producers about the possibility of additional risk premiums should regional tensions rise further.
But expansion plans are continuing at Saudi Arabia's main petrochemical production hub, despite the potential risks, with a third phase — Jubail 3 — being developed to accommodate newer projects.
Yanbu and Rabigh
Other key petrochemical sites in the country include Rabigh and Yanbu on the west coast, where Africa is a much closer destination market.
PetroRabigh, a joint venture between Aramco and Japan's Sumitomo, is the main petrochemical producer based in Rabigh. PetroRabigh produces a variety of petrochemical products including olefins, aromatics, polymers and PMMA.
Infrastructure is actively being developed in Yanbu, where a crude oil to chemicals (COTC) plant jointly operated by Sabic and Aramco is scheduled to start operations in 2025. The COTC plant will process 400,000 b/d of crude into 9mn t/yr of chemicals and base oils.
Saudi petrochemical companies Natpet, Yansab and Yanpet are already based in Yanbu.
UAE, Iran expansions
Saudi Arabia is expected to dominate petrochemical production in the Middle East for some time, but new projects are also in the works in UAE and Iran.
UAE's state-owned Adnoc last year announced a $45bn downstream investment plan to create a massive refining and petrochemicals complex at Ruwais by 2024. Adnoc is looking to tap foreign investment through long-term downstream partnerships as part of its plans.
Iran is also expanding capacity at Assaluyeh and the Mokran petrochemical complex in Chabahar, although sanctions affecting foreign investment and technology are likely to delay the large projects.
