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Opinion: GCC downstream industry leaps forward through technological progress

by Guest on May 17, 2018


Stefan Chapman, vice president of Euro Petroleum Consultants.
Stefan Chapman, vice president of Euro Petroleum Consultants.

In today's business climate, the competition in the refining and petrochemical industry continues to increase – year after year and in every region – and the GCC is no exception, comments Stefan Chapman  of Euro Petroleum Consultants.

The key for the success of the refining and petrochemical companies is to continue exploring ways to maximise returns not only by investing in existing assets but also through investment in innovation and development activities for long-term growth. This means renewed efforts in finding fresh answers to the challenges, through technology and catalytic innovations, and optimised operational efficiency.

There remains a clear drive and commitment on improving product specifications, increasing conversion, reducing emissions and increasing margins – technologies being at the centre of these developments and advances. Despite some market uncertainty, a significant number of companies have driven ahead with planned investments backed by sound financial resources – this has been the case in Middle East region.

The evolving downstream landscape in the GCC

Refining-petrochemical integration is a proven route to maintaining competitive edge. The extent to which any of the technically feasible integration options can be implemented and produce economic benefit is dependent on a number of factors. Regional trends for feedstock availability, process economics and product demand, as well as ownership issues, all potentially play a role. As a result, the extent of refining-petrochemical integration varies from region to region.

Petrochemical feedstock is an important driver in majority of the cases. Availability of NGL (natural gas liquid) feeds, such as ethane, reduces the need for refinery-based liquid feedstocks. The result is a lower degree of refining-petrochemical integration and this was the trend in the GCC – limited refining-petrochemical integration. This situation has begun to evolve with reduced ethane availability for new projects and has been reduced with specific conditions being applied to new feedstock allocations.

So, this has resulted in liquid feedstock starting to be used in the region. Future petrochemical growth in the Middle East will likely require further consideration of liquid feedstocks and therefore increased refining-petrochemical integration.

Future investments within the petrochemical industry in the GCC are likely to be based on LPG (liquefied petroleum gas), mixed feed, or naphtha cracking. Diversification is also a key driver for the region – liquid feedstocks produce a wider range of products, enabling a more diverse downstream portfolio. Prime example of this evolution is the mixed feed cracker that is part of the Sadara complex (1.5 million tonnes per year), which produces many derivatives for the first time in the GCC.

Let us take a look in more detail at other GCC projects that are using technological evolution to drive their refining and petrochemicals businesses in the region.

Projects in the UAE

ADNOC Refining is undertaking a project to increase crude processing flexibility to improve margins at their 800,000 barrels per day (bpd) Ruwais refining complex in the UAE. Project investment is estimated at $3.1bn. The aim of the project is to enable the plant to process medium-sour crude types such as Upper Zakum crude. The refinery presently processes the UAE-produced light sweet crude. This change in strategy will in turn allow the UAE to export the higher priced light sweet crude to global oil markets.

On the technology side, the project will add an atmospheric residue desulphurisation unit to upgrade medium-to-heavier crudes (like Upper Zakum) into higher value and cleaner transportation fuels, as well as convert residues for production of LSFO (low sulphur fuel oil) and hydrotreated feedstocks. The project will enhance the ability of Ruwais petroleum products to compete on the world market while meeting stringent international environmental regulations. EPC (engineering, procurement and construction) services have been awarded to a joint venture of CB&I and Samsung Engineering Co.

A vibrant Saudi Arabia

During a recent meeting in Paris, Saudi Aramco and Total signed a memorandum of understanding to build a giant petrochemical complex in Jubail, Saudi Arabia. The new complex will be integrated downstream to the SATORP refinery, a joint venture between Saudi Aramco (62.5%) and Total (37.5%), located in Jubail, and will be designed to maximise operational synergies between the sites.

The Jubail SATORP complex was started up back in 2014 and is now operating at 440,000bpd. Today, it is recognised as one of the most successful in the world. The new complex will include a world-class mixed-feed steam cracker (50% ethane and refinery gas) – 1.5 million tonnes of ethylene per year – and associated high value-added petrochemical units. This project will represent an investment of approximately $5bn. Both partners have planned to start the engineering studies in Q3-2018.


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