CAPITAL: Riyadh

MONETARY UNIT: Riyal

REFINING CAPACITY: 1,650,700 b/cd

OIL PRODUCTION: 7.9 million b/d

OIL RESERVES: 259 billion bbl

GAS RESERVES: 190 tcf

Already a world-class petrochemical producer and exporter, Saudi Arabia in 1997 added plans to increase petrochemical capacity dramatically. Several projects were under construction at Yanbu on the Red Sea coast and at Al Jubail on the Persian Gulf, most of them to use natural gas as feedstock.

To help provide adequate natural gas supplies, Saudi Arabian Oil Co. (Saudi Aramco) was in the process of expanding its natural gas processing capacity by debottlenecking three plants-Uthmaniyah, Shedgum, and Berri. In addition, the kingdom planned to construct another plant at Hawiyah. Together, these plants will increase nameplate capacity of the Saudi Master Gas System (MGS) by 61% from 3.95 bcfd in 1995 to 6.34 bcfd in 2002.

In association with expansion of the MGS, Aramco will expand production of natural gas and associated condensate. The volume of additional condensate was not known since the liquids content varies considerably for gas produced from the Permian Khuff formation.

The government of Saudi Arabia will obtain revenue from three sources-the domestic sale of natural gas to the petrochemical companies (less the government share), total export earnings from the sale of condensate, and the government`s share of export revenues from the sale of petrochemicals (the government typically owns about 45% of the projects).

As part of the expansion of the MGS, Saudi Aramco will lay a pipeline from the Hawiyah gas processing plant to the Saudi Consolidated Electric Co. for the Central Province of Saudi Arabia (Sceco Central). Sceco Central uses about 200,000 b/d of Arab light crude oil to generate electricity. It is estimated that 100,000 b/d of oil burned at Sceco Central will be replaced by natural gas.

The government will obtain revenues from the domestic sale of gas to the electric utility and from the incremental value of the additional exports of 100,000 b/d of Arab light crude (since the export price for Arab light is much higher than the domestic price Sceco Central pays).

Yanbu processing activity

In petrochemical project action at Yanbu:

- Saudi Yanbu Petrochemical Corp. (Yanpet), a joint venture of Saudi Basic Industries Corp. (Sabic) and Mobil Corp., secured $2.3 billion in loans to undertake a major expansion at its Yanbu complex.

By 2000, Yanpet intends to build an 800,000-metric ton/year ethylene cracker, plus new units to produce as much as 535,000 tons/year of polyethylene, 410,000 tons/year of ethylene glycol, 260,000 tons/year of polypropylene, and 125,000 tons/year of pyrolysis gasoline. The project will double Yanpet`s total output to 3.6 million tons/year.

- Yanpet let contract to Tokyo firms Mitsubishi Heavy Industries Ltd. and Toyo Engineering Corp. and ABB Lummus Global Inc., Bloomfield, N.J., to build the expanded and integrated petrochemical plant.

Petrochemicals made from local naphtha feed will be exported to Asia and Europe. ABB Lummus will build the ethylene plant, Toyo the ethylene glycol and ethylene oxide units, and Mitsubishi the polyethylene and polypropylene facilities.

- Sabic and 50-50 joint venture partner Mobil let contract to a unit of Fluor Daniel Inc., Irvine, Calif., to oversee the project to double production capacity at its petrochemical complex. Fluor will be project manager and provide engineering, procurement, and construction services for associated utilities and offsite work.

Al Jubail processing activity

The scope of work on petrochemical projects at Al Jubail was a mix of enterprises:

- Saudi Methanol Co., a unit of Sabic, secured a $175 million loan from Export-Import Bank of Japan. The money was to help fund construction of the company`s fourth chemical-grade methanol plant.

The plant will have a capacity of 850,000 metric tons/year. Another 850,000 ton/year unit, the kingdom`s third, was due to come on stream during 1997.

- Sabic let contracts to Technip Saudi Arabia and Kinetics Technology International BV, a unit of Mannesmann AG, Dusseldorf, for engineering, design, supply, and construction of the complete furnace section of a new ethylene unit at the Jubail complex operated by its Petrokemya (Arabian Petrochemical Co.) subsidiary.

The work involves eight furnaces for the production of 800,000 metric tons/ year of ethylene. The furnace section will fit into the basic package being developed by Stone & Webster Inc., Boston. Work was slated for completion early in 2000.

- Saudi Chevron Petrochemical Co. (SCPC), Riyadh, signed a $305 million loan agreement covering part of the project cost for a $650 million petrochemical plant.

The plant, slated for completion in mid-1999, will produce 482,000 metric tons/year of benzene and 220,000 tons/year of cyclohexane, exporting 60-70% of output initially to markets in northwestern Europe and Asia. SCPC, a venture of Chevron Chemical Co. and Saudi Industrial Venture Capital Group, is Saudi Arabia`s first privately owned petrochemical venture.

- Saudi Methanol let contract to Mitsubishi Heavy Industries Ltd. to build a 2,500 metric ton/day methanol plant for planned start-up in April 1999. The plant will use a new high-conversion methanol synthesis process developed by units of Mitsubishi. Saudi Methanol is a joint venture of Sabic and Japan Saudi Methanol Co.

- Petrokemya signed an agreement with Stone & Webster to build an 800,000 metric ton/year flexible-feedstock ethylene plant with a 275,000 ton/year propane cracking unit. The plant can use propane or ethane feed.

The project, due on stream in first quarter 2000, also will supply ethylene for another plant expansion by Sabic unit Sharq (Eastern Petrochemical Co.). Sharq was doubling capacity of ethylene glycol and polyethylene the second time in the 1990s, after finishing a 289,000 ton/year expansion in 1994.

- Saudi Arabian Fertilizer Co. (Safco), a unit of Sabic, let a $400 million contract to Tecnimont SpA, Milan, to construct a 500,000-metric ton/year ammonia plant and a 600,000-ton/year urea plant. The plants were due on stream by yearend 1999.

The project will hike Safco`s total production capacity at Al Jubail and its Dammam fertilizer plant to 1.2 million tons/year of ammonia and more than 1.5 million tons/year of urea.