Saudi Aramco Yanbu Refinery, Saudi Arabia
Saudi Aramco, a Saudi Arabia-based international petroleum company, announced plans to construct a 400,000bpd full-conversion refinery at Yanbu in 2006. Yanbu is an important Red Sea port in the Al Madinah province of Saudi Arabia.
The refinery is estimated to cost $12bn and is spread over an area of 5.2 million square metres. It is scheduled to begin operations in the third quarter of 2014 and will be Saudi Aramco's second refinery in Yanbu.
Saudi Aramco is building another refinery in Jubail in partnership with Total. The Yanbu and Jubail refineries are expected to be completed in time to process crude oil from the Manifa offshore field, which has a capacity of 500,000bpd. The field will be operational in 2013.
Aramco has formed a joint venture with ConocoPhillips to develop and run the refinery. Currently the companies hold 50-50 interest split in the project. Subject to regulatory approvals, the companies will announce a public issue of up to 30% stake in the project.
Yanbu boost to Saudi refining capacity
The Yanbu refinery will produce high-quality, ultra-low sulphur-refined products that satisfy existing and future US and European product specifications. As well as expanding Saudi Arabia's refining capacity, the project will provide refined products to domestic and international markets. The project is expected to attract foreign investment, expand Saudi Arabia's economy and create more job avenues for Saudis.
The Yanbu refinery is one of four refineries that Aramco plans to build in the near future. The refineries are expected to bolster the country's domestic refining capacity from 2.1 million bpd to 3.8 million bpd. Heavy crude oil is not a feasible option for most importing nations because it is difficult to transport and expensive to refine.
The production of heavy crude oil is expected to increase as oil-producing fields in Saudi Arabia start to age. Saudi Arabia is, therefore, focusing on improving its refining capacities to ensure flexibility of its export prices.
Yanbu refinery project background
Plans for building the Yanbu plant were originally announced in 2006, but were delayed due to uncertainties in the financial and contracting markets.
Saudi Aramco and ConocoPhillips signed an agreement in 2006 to develop and run the refinery. The agreement covered various aspects of the project, including its configuration and a wide range of important technical, commercial, legal and financial terms.
In April 2010, ConocoPhillips withdrew from the project in order to reduce its downstream activities and concentrate on petroleum exploration.
In March 2011, Aramco signed a memorandum of understanding (MoU) with Sinopec to develop the Yanbu refinery. As per the MoU, Aramco and Sinopec will share equity interests of 62.5% and 37.5%, respectively, in the project.
The Yanbu refinery will produce 90,000bpd of petrol, 263,000bpd of ultra low sulphur diesel, 6.3 billion tonnes per year of coke and 1.2 billion tonnes per day of sulphur.
Contracts for Saudi Aramco's Yanbu refinery
The initial evaluation, front-end engineering and design of the Yanbu refinery project were carried out by Houston-based engineering and construction company KBR. In August 2009, KBR was also awarded the contract to provide engineering and procurement services for the project's utilities package, interconnecting systems and pipe racks.
Abdulrahman Al-Shalawi Establishment carried out site preparation works for the refinery.
In July 2010, Saudi Aramco awarded seven EPC contracts for the project. Spain's Tecnicas Reunidas won the EPC contract for the coker unit.
The hydrocracker and petrol unit will be built by South Korea's Daelim Industrial and Seoul-based SK Engineering received the contract for the crude unit.
Dayim Punj Lloyd, a subsidiary of India's Punj Lloyd, will be responsible for building the Yanbu refinery's offshore infrastructure and pipelines.
Punj Lloyd will construct a 36-60in diameter steel pipelines that will transport fuel gas, diesel, water, petrol and benzene. It will also construct 133.8-114.1in-diameter, reinforced thermosetting plastic pipelines to carry seawater, electrical and metering systems.