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Site visit: Jubail Industrial City

Construction Week takes a tour of Jubail Industrial City

ANALYSIS, Site Visits, Projects

The figures surrounding Jubail Industrial City are staggering. The city, which has sprung up from an area of Saudi Arabia’s Eastern Province that contained a fishing village less than 40 years ago, is now responsible for around 7% of Saudi Arabia’s GDP. Add in the economic output of its western coast twin city of Yanbu, and they are not only responsible for 12% of GDP, but also two-thirds of the Kingdom’s entire industrial production.

What’s more, Jubail is growing at a phenomenal rate. A new mega-refinery, Satorp, which is nearing completion, sits on a site of more than 4km2 and has cost an estimated $14bn to build. The project, which is a joint venture between Saudi Aramco (which has a 62.5% stake) and France’s Total (37.5%), is currently in experimental production phase, with the first refined products from the plant being shipped via huge lines directly to the nearby King Fahad Port in September.

The refinery, which is capable of processing 400,000 barrels of oil per day into petrol, diesel, jet fuel and a variety of other useful products, would be a major standalone asset in most countries.

In Jubail, however, it is merely one of four phases of Jubail Industrial City II – a massive site that only began to be built in 2006. And it isn’t even the largest part. It is being followed by a new downstream chemicals complex containing 26 different manufacturing units that is costing $19.3bn to develop.

These, and the thousands of villas, shops, leisure facilities and other amenities required for the staff who will work within them are overseen by the Royal Commission for Jubail and Yanbu (RCJY) – an organisation specifically set up by the Saudi Government in 1975 as an autonomous organisation to develop and run the cities. The Commission takes responsibility for the entire operations of the city – from its fire stations and police forces through to schools and hospitals.

From the outset, the commission employed Bechtel to help create a masterplan for the delivery of Jubail. Approximately three years was spent developing this masterplan, which was used as the basis for a work plan to prioritise which projects need to be brought forwards in order to develop the city.

Bechtel, which is a project management consultant to the Commission, is currently working through the 39th version of Jubail's work plan and is putting finishing touches to the 40th.

Gordon Anderson, manager of projects for Saudi Arabian Bechtel, argues that the initial masterplan “has stood the test of time”. Jubail has been listed in the Guinness Book of Records as the biggest construction engineering project in the world, and is continuing to grow.

“Having been a Bechtel employee for a long time you hear a lot about Jubail and when you come here you see it literally is a city rising out of the desert,” he says.

“You’ll see parts that have been here for 30 years, parts under construction and sand that will start growing in the future.”

Work began on the first phase of the city in 1977. It is spread over 40.86 km2 and has around 19 primary industries using gas and oil feedstocks to produce a range of products such as refined oil, petrochemicals, steel, glass and aluminium, as well as an area with secondary and light industry units that take these materials and create useful products with them.

Many of the larger factories are partly owned by Saudi Basic Industries (Sabic), with overseas investors also taking stakes.

By 2002, the area was almost full and a decision was taken to move forwards to build a second industrial city, with work eventually starting on the site in 2006.

Jubail Industrial City II was envisioned as a four-phase development. Three of these four phases are now at various stages of development, covering 35.8km2. A further 17km2 has been set aside for the fourth and final phase of Jubail II.

“For the fourth stage, we will do initial site development, but there’s no current plans for industry in that area,” Anderson explains.

Phase one contains a number of major industrial projects including a $750m (SR2.6bn) plant producing ethylene vinyl acetate and low-density polyethylene. It is a joint venture between Saudi International Petrochemicals (75% stake) and Korea’s Hanwha Chemicals Corp, which began trial runs and testing in September and is expected to ramp up to full production within the next few weeks. Others include an $800m (SR3bn) chemicals plant for Jubail Chemical Industries and a $533m (SR2bn) facility for Saudi Arabian Fertiliser Co.

Phase two of Jubail II contains the aforementioned $14bn Satorp refinery, which saw 43,000 people per day working on the project at its peak.

Phase three contains the even larger Sadara chemicals complex being built by a joint venture between Saudi Aramco (65% stake) and Dow Chemical Co (35%).

It is a $19.3bn, 8km2 complex containing 26 different manufacturing plants. It has an ethylene cracker and polyethylene plant at its core, which will be used to produce a range of performance materials and plastics including glycol ethers, propylene glycol, low- and high-density polyethylene and elastomers that will serve a purpose-built Plaschem park adjacent to its complex.

This park will house a range of companies using the materials produced at Sadara and converting them into products for a huge range of uses in the automotive, packaging, coatings, construction and electronics markets, among others.

The agreement to build this huge facility was signed two years ago, and the main engineering, procurement and construction contracts were signed during the third quarter of last year. The complex is being project managed by US-based engineering consultancy KBR.

The joint venture raised the $12.5bn in debt funding required to develop the site by June this year, with the remaining $6.8bn coming in equity from the partners. Saudi Aramco has plans to float 30% of its shares in the facility, which is expected to generate products worth around $500m a year, at a later date. The first Sadara units are expected to begin operations in 2015, with full production expected to get underway in 2016.

Although both complexes are being developed by their owners, the Royal Commission and Bechtel has had to ensure that the infrastructure – including cooling systems, power and other vital infrastructure is in place so that these facilities can reach their expected potential. For instance, a 90km rail line is being built that will improve links to the port, as well as around the city and on to Dammam. From there, it will link into the wider GCC rail network, which has a targeted completion date of 2018.

Anderson said that infrastructure works have been specifically tailored for the requirements of Satorp and Sadara.

For instance, Jubail’s seawater cooling network, which is one of the biggest in the world, has been extended into the heart of both sites via a complex network of pipes. The system has 28 pumps and a capacity to handle 25m m3 of water per day.

Jubail uses a network of three, 11km-long canals for cooling. One moves water into the industrial areas, one moves it back out and a third is used for emergency and maintenance purposes.

Anderson said the two plants have “given a huge lift to Jubail and the next phase”.

“There’s downstream products now like the plastics and moulds which will all be done here. Rather than the byproducts of Jubail being exported, now we’re going to start manufacturing moulded plastic pellets in country.”

Mike McGarvey, manager of engineering, argued that they will also attract “lots more downstream investment” in areas like the Plaschem park. He adds that they have “really pushed demand for new housing”.

The infrastructure spend alone on Jubail Industrial City II to date has involved 427 contracts and a spend of over $13.4bn (SR50.4bn). Currently, there are 86 ongoing construction contracts with a value of $3.7bn (SR14bn) and 79 current engineering contracts worth $3.5bn (SR13bn). The work plan for 2013 alone has involved a spend of $1.2bn (SR4.6bn).

To date, more than 2,131 homes have been developed within three districts of Jubail – Al Defai and Al Fanateer, with part of the Jamlumdah district also under way. However, a further 1,902 units are planned in a further five districts – Al Surouge, Al Fasil, Al Mutrafiyah and Marmudah. Over 40km2 of housing has been developed within the city – 15km2 since 2006. A further 38km2 is now under development.

Much of this housing development is being overseen by the Royal Commission and Bechtel using their own network of contractors, but in other areas land has been handed over directly to stakeholders such as Ma’aden (responsible for developing the nearby Ras Al Khair Industrial City) or Saudi’s General Organisation of Social Insurance (GOSI), which is developing housing directly for workers at Sadara.

Within each district, work is ongoing to develop and improve existing facilities. For instance, there are currently 31 mosques, four sector centres, 30 schools, two sports centres, two clinics and two fire stations.

Future plans include 155 new mosques, 20 sector centres, 150 schools, 10 sports centres, 15 clinics, 10 fire stations, six libraries, six hospitals and a wave of new fire and police stations.

Other upgrades include new Wi-Fi networks being installed across beachfront areas, a new marina and shopping mall within Al Fanateer and an integrated waterfront development containing mixed-use retail and leisure units at Al Reggah.

The Mardumah district, which is less advanced than some of the older areas, has had large sand dunes added to give more topographical distinction. It will also contain a multi-events centre with a capacity for 1,300 people.

Perhaps the most exciting development, however, is an entirely new city centre that will sit on a 2.75km2 site at the mouth of Mardumah Bay sandwiched between the eight residential districts.

The Royal Commission is investing around $18bn in the new city centre, which is estimated to have a catchment area of around 1.3m people by 2040.

The centre will be developed around the bay’s waterfront.

Just behind the city centre will be the new Jubail University that will link into the city by a central avenue. There will also be a wide parkway running through the site, a tramway and a pedestrian shopping area.

The city will operate around cluster areas, with a large office core forming the centre of a business quarter aimed at major players in the petrochemicals industry. It will also contain leisure and residential properties, but should foster the creation of up to 15,000 new jobs by 2030. Its development will be led by major corporate anchor tenants (see pp32-37).

Elsewhere, there will be a waterfront exhibition park, marinas, museums, waterfront retail and entertainment venues. On the eastern side of the bay, there will be contemporary, mixed-use buildings. The western side will contain hotels and entertainment areas, including a new aquarium and water park. The two sides of the bay will be linked via a bridge, the tramway and by water taxis.

The Royal Commission believes this development, which will look out onto an ecologically-preserved island where flamingos and turtles nest, will help to turn Jubail from an Industrial City into a fully-fledged city in its own right.

“It’s in the masterplanning and development phases now,” Anderson explains. “It’s quite a vision for that area.”

The other major development taking place is the construction of new army and naval bases. The army base is being built next to an air defence complex on a 1.25km2 site to the west of the city, while a naval training base is being built next to the existing Jubail airport, which is currently being used for military purposes but may be subsequently converted to promote the city’s growth.

An expansion of Jubail Airport is currently earmarked for 2020.

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