Satorp to double Jubail investment

Saudi Aramco says its oil refinery joint venture with France’s Total SA will double capital investment to US$1.9 billion at Jubail, the largest industrial city in the region. Saudi Aramco Total Refinery and Petrochemicals Company (SATORP) will increase spending at the site from US$949 million in the first quarter of 2013, according to a statement on the Saudi bourse website.
State-owned Aramco holds a 62.5% stake in the project, with Total holding the remaining 37.5% stake. The capital increase will be on a pro-rata basis, the statement says.
In 2010, the joint-venture firm said it had raised US$8.5 billion towards the US$12.8 billion project and issued in 2011 US$1 billion in Islamic bonds to help pay for it.
The refinery, whose construction is close to completion, is part of Saudi Arabia’s drive to boost crude refining capacity and would process heavy crude from Aramco’s giant 900,000 barrel per day (bpd) Manifa oilfield. Aramco and Total have already started testing some units at the 400,000 bpd refinery.
The refinery would produce around 190,000 bpd of diesel fuel, around 90,000 bpd of gasoline and 50,000 bpd of kerosene, as well as petrochemicals.
The refinery is still under construction at Jubail in the eastern province, but is expected to be on stream ahead of its planned completion date of 2013. The petrochemical units will be completed in 2014.
Saudi Aramco and Total have started testing their new refinery at Jubail, raising the prospect of full operation of the US$14 billion facility ahead of a scheduled start-up in the third quarter of 2013.
Aramco relies heavily on imported gasoline and gasoil and plans to boost domestic refining capacity from 2.26 million bpd to 3.5 million bpd by 2016.
Saudi Arabia’s domestic fuel consumption has been booming because of a growing population and economy. Heavy government subsidies that make retail fuel prices some of the lowest in the world have also helped stoke demand.
The state-run company is building two more refineries apart from Satorp, one near the Red Sea city of Yanbu with China’s Sinopec, and another at Jizan, near the border with Yemen. All will produce cleaner fuels and some petrochemicals. It has also started upgrading existing refineries with a US$2 billion project at a joint venture with U.S.-based ExxonMobil due to be in operation in 2013.
Jubail will refine Saudi heavy crude into a range of fuels – from gasoline to petroleum coke – for domestic consumption and export. Around 54% of the project’s output will be diesel fuel and jet fuel, with an estimated quantity of 11.4 million tons per year. Annual gasoline and petcoke production is estimated to be around 2.8 million tons and 2.1 million tons respectively.
(March 25, 2013)