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Saudi Arabia reforms power chemical plant construction

The Aramco-Sabic COTC complex in Yanbu is one of Saudi's largest construction schemes

Sabic (pictured) and Saudi Aramco are building a chemical megaproject in Yanbu.
Sabic (pictured) and Saudi Aramco are building a chemical megaproject in Yanbu.

Industrial development in the Middle East region has witnessed a steady pace of expansion, as governments bolster manufacturing capabilities to oil the wheels of economic change. One of the many positive effects from this development is the buoyant state of chemical plant construction, a sector that is rapidly picking up pace, particularly in Saudi Arabia.

In the past 12 months, the region has seen significant progress made by Saudi Aramco and Sabic’s crude-oil-to-chemical complex, after the kingdom’s two industrial giants identified a location for the chemical plant.

Nationwide, the country is braced for a surge in the number of chemical-related infrastructure projects in its pipeline. Deloitte claims that the kingdom’s pipeline of planned chemical projects between 2018 and 2020 could be worth up to $43bn (SAR161bn). The Aramco-Sabic project alone is responsible for more than half of the projected capital expenditure and is estimated to cost approximately $25bn (SAR93bn) to build.

Currently at the front-end engineering and design (Feed) stage of development, an important step was taken in November when Aramco and Sabic picked the city of Yanbu as the site for the factory that will create up to 30,000 new jobs.

Neither company has revealed why the port city of Yanbu, located on Saudi Arabia’s west coast, was selected as the place to build the massive facility, and the date for the start of construction has yet to be made public. However, it is understood that the complex will process 400,000 barrels of crude oil per day and pump out more than eight million tonnes of chemicals and base oils from the oil it processes.

British contracting company Wood Group and US engineering firm KBR have already won the respective project management and Feed contracts for the complex, which aims to start operations in 2025.

Saudi Aramco and Sabic claim that the project, which is expected to become a catalyst for economic diversification in the kingdom, will strengthen Saudi Arabia’s “position as a global leader in chemicals” by increasing production and maximising its hydrocarbon value.

READ: Chemicals vital to Gulf’s economic diversification strategy

While the Yanbu plant is the kingdom’s biggest chemical construction project at present, there are still billions of dollars in the chemical-project pipeline. In September 2018, Veolia Water Technologies and Saudi Bio-Acids Company agreed to design and build wastewater treatment plants for what Saudi Bio-Acids Company said would be the Middle East’s first citric acid factory, set to be located in Jeddah. The facility aims to produce more than 70,000t of citric acid and citrate within a three-year timeframe.

Region-wide, the pipeline of planned chemical-related construction projects is small in comparison to larger infrastructure projects, such as those in the sectors of power and transportation. Chemical-related construction accounts for just 3% of all projects, Deloitte claims.

In the UAE, real estate projects may punctuate the skyline, but there are also some chemical developments in the mix, such as Shaheen Chem Investments’ ethylene dichloride and caustic soda plant. In late 2017, plans were revealed for the complex, which will be built on a 300,000m² plot near to Emirates Global Aluminium’s (EGA) under-construction Al Taweelah site, incorporating plenty of room for future expansion.

Production throughput for Phase 1 is expected to be 130,000t of caustic soda and 160,000t of ethylene dichloride per year. Once ramped up, Shaheen’s plant will meet all of EGA’s caustic soda needs, according to the aluminimum smelter. Along with bauxite, caustic soda is an important raw material for alumina refining, and the stockpiling of both is important for EGA’s plans for the sequential commissioning of the Taweelah site in Abu Dhabi.

Upon completion, Shaheen’s plant will be the first alumina refinery in the UAE and the second in the Middle East. It is expected to boost the UAE’s gross domestic product by $272m (AED1bn) per year, and create up to 600 full-time jobs.

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