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Technological Progress: At the heart of the Refining & Petrochemical Industry in the GCC

In today’s business climate we see that competition in the Refining & Petrochemical sectors continues to increase – year after year and in every region – the GCC is no exception.

The key for companies is to continue exploring ways to maximise returns; 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 & 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 ME region.

The total investment for the region during the next five years is estimated at $800 bln – with the majority allocated to ‘’catch-up’’ programmes and factoring in project cost inflation.


For Refiners, upcoming regulations and challenges have meant a change in strategy and approach – the key being increased conversion and increased flexibility – via a wider product slate.

Refinery complexity is increasing and although this has capital cost implications, the benefits in terms of flexibility and financial performance are very considerable indeed.

In refining and in particular for those refineries processing heavier crudes, there is a simple challenge – how to increase the overall conversion of the residues of all crudes into the most valuable distillates.

With the IMO Marpol VI regulation coming into effect in January 2020 Refiners are looking at the best strategies to minimise HS Fuel Oil production - by means of integrating deep conversion processes into their asset configuration.

plant image There is plenty of criteria available to help choose between various process options. On top of technical features, it is important to factor in operational strategy of the plant as well as consider the business environment.

Refiners in the GCC are well aware of the challenges and are implementing different technologies and strategies to meet these challenges head on – we will see a few specific examples later.


Switching our attention to the petrochemical industry, it is also navigating many challenges and adapting to volatile feedstock prices, changes in global supply and demand patterns and strict environmental regulations.

In recent years a large amount of petrochemical capacity has been added in China, the US and the Middle East – adding uncertainty to the fragile supply-demand balance globally. The strategies implemented by the petrochemical industry in each region are quite distinct and are shaped by the particular conditions and characteristics of each region.

The Middle East enjoys the world lowest cost ethylene production.

The Middle East enjoys the world lowest cost ethylene production thanks to cheap ethane - the region has seen substantial capacity additions in the last decade - growing at an average of 10% since 2008. The expansion rate is expected to be more moderate in the future but several petrochemical projects are still underway or at planning stage. The majority of the additional petrochemical production will be targeting export markets.

Like their Refining counterparts, petrochemical producers will need to win competitive advantage to maintain or increase market share based on feedstock costs, location and efficient running of their operations.

Promoting maximum organisational efficiency and improving operational performance should be top objectives for all petrochemical operations.

GCC – The evolving Refining & Petrochemical landscape

Refinery-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 refinery petrochemical integration varies from region to region.

plant imge Petrochemical feedstock is an important driver in the large majority of cases. Availability of NGL feeds, such as ethane, reduces the need for refinery based liquid feedstocks. The result is a lower degree of refinery petrochemical integration and this was the trend in the GCC - limited Refinery & 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 refinery and petrochemical integration.

Future petrochemical industry investments within the GCC are likely to be based on LPG, 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 tons 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.

  1. UAE

    ADNOC Refining is undertaking a project to increase crude processing flexibility to improve margins at their 800,000-b/d Ruwais refining complex in the UAE. Project investment is estimated at $3.1-billion.

    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 UAE produced light sweet crude.

    This change in strategy will in turn allow 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 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 services have been awarded to a JV of CB&I and Samsung Engineering Co. Ltd.


    Saudi Aramco & Total – 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 of 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.

    Jubail SATORP is one of the most successful in the world.

    The Jubail SATORP complex was started up back in 2014 and is now operating at 440,000 barrels per day – 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 $5 billion. Both partners have planned to start engineering studies in Q3 2018.

    The steam cracker will also supply other petrochemical and specialty chemicals plants, representing a total of $4 billion for third-party investors.

    In total, $9 billion will be invested, creating 8,000 direct and indirect local jobs. The project will produce more than 2.7 million tonnes of high value-added chemicals.

    SABIC / SAUDI ARAMCO – also located in Saudi Arabia and drawing lots of attention is the joint project between Saudi Aramco and SABIC. This project is called OTC - oil to chemicals - and its aim is to fully convert crude oil into petrochemical products.

    This project, which according to both partners will be the largest processing site of its kind in the world, is part of the Saudi economy diversification drive.

    The project would process about 400,000 barrels per day (bpd) of Arabian light crude oil to make about 9 million tonnes of chemicals and base oils a year, plus 200,000 bpd of diesel for domestic use.

    In this Oil-To-Chemical project, Sabic is considering using the refined crude oil to directly feed three steam crackers, each one dedicated to:

    - Naphtha
    - Fuel oil
    - Natural gas liquids (NGL)

    Then olefin and aromatic petrochemical units will be integrated together around these crackers.

    The COTC complex will comprise an innovative configuration of unit operations that, in combination, will generate the world's highest yield conversion of oil to chemicals.

    The configuration of the project is currently under development but will most likely be based on the Saudi Aramco demonstration plant, namely, a combination of slurry hydrocracker and high severity FCCU.


    KNPC - the Al-Zour new refinery project (NRP), is a grass root refinery, with a production capacity of 615,000 bbl/d crude oil and is expected to account for more than 40% of the total refining capacity of the country – making it one of the largest in the Middle East upon completion in 2019.

    KNPC signed $13 billion in contracts in mid-October 2016.

    Al-Zour will process Kuwait's heavy crude from the north of the country and provide more low sulphur fuel oil for power production. KNPC signed $13 billion in contracts in mid-October 2016.

    Initially a large slice of the Al-Zour production was earmarked for domestic consumption – but market conditions are always evolving. For example the new facility will produce LSFO – destined for domestic power generation. But with the approaching IMO regulation this LSFO is likely to be very valuable come January 2020 – so will it stay in the country?

    The Al-Zour Refinery will also be an Integrated Complex, which will produce olefins and aromatics.

    The Petrochemicals aspect was an influential driver for project validation – the plant will use entirely liquid feedstock from the refinery. Planned units include a steam cracker with an ethylene capacity of 1.4 million mt/year, a 450,000 mt/year propylene plant, a 940,000 mt/year polyethylene plant and a 550,000 mt/year polypropylene plant. To manage the new complex (refinery, petrochemicals and LNG import operations) Kuwait Petroleum Corporation KPC has created a new subsidiary Kuwait Integrated Petroleum Industries Company (KIPIC).

    KIPIC will be tasked to manufacture refined petroleum and petrochemicals products and supply LNG in a reliable, efficient, safe and environmentally responsible manner to meet Kuwait's energy demand and maximising profit margins through integration.

  4. OMAN

    Duqm Refinery is a joint venture between Oman Oil Company (OOC) and Kuwait Petroleum International (KPI).

    The Refinery has been designed to process 230,000 barrels of various types of blends and once completed will produce Diesel, Jet fuel, Naphtha, LPG, Sulphur and Pet coke as its primary products.

    The project will include a crude distillation / vacuum distillation unit, sour water strippers, amine units, and offsite and utility systems.

    Conversion units will be key to the Duqm Refinery configuration – making it a state of the art plant - with latest technologies for the following processes: Hydrocracker unit, Delayed Coking unit.

    Other units will include hydrogen production unit, diesel hydrotreating unit, a saturated gas plant, an LPG treatment unit, a kerosene treatment unit and a sulphur recovery unit.

    Selected licensors include Chevron Lumus Global, UOP, Fluor, and Wood (Amec Foster Wheeler)

    Studies are also being performed to integrate a petrochemical complex at the same site. The adjacent facility is expected to incorporate a mixed feedstock cracker, a polypropylene plant, an aromatics facility and a styrene plant - mainly aimed at the fast growing regional and Asian markets.

    Detailed Feasibility Study was completed in 2017 and FEED phase is slated to start sometime in 2018.

These different projects and different technological strategies highlight the commitment of GCC countries to remain at the forefront and remain competitive in the Refining & Petrochemical sectors.

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Published by:

May 2018