PETRORabigh’s final financing documents signed
Posted: 20 March 2006
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Representatives of the Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo Chemical) broke ground on the PETRORabigh project yesterday and signed the final project financing documents to develop a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh, on the Kingdom’s west coast.
In August, 2005, Saudi Aramco and Sumitomo Chemical signed an agreement to form PETRORabigh as a joint venture (JV), following the successful completion of a joint feasibility study, during which both companies performed front-end engineering design and verified the viability of the project.
The joint feasibility study began on May 9, 2004, when Saudi Aramco and Sumitomo Chemical signed a memorandum of understanding to launch the effort. Subsequently, the JV was formed in September 2005.
Concurrent with the feasibility work and early engineering activities, long-lead equipment and materials were identified and procurement efforts begun. At the same time, the major engineering, procurement and construction (EPC) contracts have been signed and awarded. Work on all the EPC contracts has started, including the construction work on site for the major units.
More recently, at a signing ceremony on March 2 in London, PETRORabigh signed financing agreements with Japan Bank for International Cooperation (JBIC), Public Investment Fund of Saudi Arabia (PIF) and 17 financial institutions in respect of facilities tot aling US$5.8 billion. The facilities have been raised for the Rabigh Refinery and Petrochemical Project to be developed.
When completed in late 2008, the PETRORabigh Project will be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.4 million tons of petrochemical solids and liquids, along with large volumes of gasoline and other refined products, will be produced. Also, this project has created third-party investment opportunities in Saudi Arabia’s private sector for utilities and other related infrastructure.
It presents an opportunity for increased industri alization in Saudi Arabia and a platform for more diversified downstream conversion industry development in the Kingdom. This Project represents a concrete example of the Kingdom’s strategy of attracting foreign investment to expand its economy and provide increased job opportunities for Saudi nationals. It is also consistent with the objective of creating opportunities for private local investment in service and other related industries.
Through this joint venture, Sumitomo Chemical, a major producer of polyolefins, will secure a reliable and stable supply of feedstock to strengthen its medium- and long-term competitiveness. This project constitutes an important step forward in enhancing the global competitiveness of the company’s petrochemical operations. Although Sumitomo Chemical has been operating a large-scale complex in a petroleum-refining center, Singapore, since 1984, the Rabigh project is the company’s first step to establish a foothold in an oil and gas-producing country, thereby assuring stable feedstock supply for its operations. The project will, therefore, open a new stage in Sumitomo Chemical’s worldwide business strategy.
Posted by Editor Pipeline Magazine
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