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$10b Petro Rabigh project to diversify Saudi economy

JEDDAH — The integrated oil refinery and petrochemical complex of Petro Rabigh will prove a tipping point in the kingdom's efforts to diversify its economy and forge the development of sustainable downstream industries.

Petro Rabigh, in a statement, said huge integrated facility is being constructed at the site of Saudi Aramco's existing Rabigh refinery, which produces 19 per cent of the kingdom's current refining capacity.

The project is a joint venture between Saudi Aramco and Sumitomo Chemical of Japan.

"Saudi Arabia has long thrived on oil production, but this enterprise marks a new direction," said Saad Al Dosari, chief executive officer, president and member of the board of directors of Petro Rabigh.

"Previously Saudi Aramco produced massive amounts of relatively low-value products at the Rabigh refinery. Now we can convert these into extremely valuable commodities."

"Petrochemicals are all around us, in everything from car parts to shampoo. This project therefore has the potential to fuel Saudi manufacturing industry," he added.

The existing Rabigh refinery, which was commissioned in 1989, has a current crude processing capacity of 400,000 barrels per day (bpd) and produces naphtha, kerosene, diesel and fuel oil.

The $10 billion project, located on the Red Sea port of Rabigh, is scheduled for completion in the third quarter of 2008 with commercial operations expected to commence in the fourth quarter of next year.

"This venture will provide more employment opportunities to Saudi people and contribute major share in the country's GDP growth," Al Dosari said. "The atmosphere is positive. We are paving the way for a new Saudi Arabia," he added.

Petro Rabigh, launched in September 2005 as a 50:50 joint venture between Saudi Aramco and Sumitomo Chemical, is the largest combined oil refinery and petrochemical production facility ever to be built at one time.

Saudi Aramco will supply Petro Rabigh with the feedstock necessary to operate the plant, including ethane, on a long-term, fixed-price basis and will market the refined products produced by Petro Rabigh. Sumitomo Chemical will provide petrochemical international sales and marketing expertise, as well as technology licensing.

According to a recent report carried by Japan Corporate News Network, Sumitomo Chemical has announced that Petro Rabigh, its 50-50 joint venture with Saudi Aramco, will hold its initial public offering on the Saudi Arabian stock exchange in early January 2008. It explained that Saudi government, seeking to cultivate its domestic stock market, is promoting the new listing of prime companies on Saudi Arabia's stock exchange.

"Thus, the government encouraged Petro Rabigh to hold an early IPO, and after due consideration and careful examination, the company decided to apply for the IPO, resulting in the recent approval for the offering by the Saudi Capital Market Authority," it said. "The IPO will allow Petro Rabigh to contribute to Saudi Arabia's economic development through its role in enhancing the Saudi stock exchange as a listed company," the report added.