Al Jubail, Saudi Arabia

Al Jubail in Saudi Arabia is the site for a benzene and cyclohexane plant belonging to Saudi Chevron Petrochemical. Al Jubail is a major centre of Saudi Arabian petrochemical development. The plant was announced in late March 1997, and commissioned in the middle of 1999, within budget. Indeed, the company president has claimed that it brought the plant into operation $30 million under budget. It was officially opened at a ceremony on the first of February 2000.


The cost of the new Saudi Chevron plant is about $650 million (approximately Riyal 2.4 billion). Natural gas feedstock will be supplied by Saudi Aramco. The plant was commissioned in the second half of 1999. It will produce 480,000t/yr of benzene. Cyclohexane production will be 220,000 t/yr.

The new aromatics plant uses Chevron's Aromax technology. Chevron already has an Aromax plant at Pascagoula, Mississippi in the USA, but the new Saudi Arabian plant is expected to have better catalyst run times and conversion performance. Aromax was specifically developed to take advantage of low-quality feedstocks in order to make more expensive benzene. Chevron also has prior experience of cyclohexane plants, having a facility in Port Arthur, Texas in the USA.


The plant may also aid Chevron in a projected paraxylene extraction and processing plant in the Eastern Province for Saudi Aramco. The proposal would cost in the region of $700-1,000 million. However, the limited margins available in aromatics may delay this project until the revival in Asian demand re-empowers the market. Saudi Chevron Petrochemical also has some fears about the prospects of securing mixed xylenes supplies from Saudi Aramco since the refining company has delayed a decision on whether to deliver. Without mixed xylene supply, the project will probably fall through. Should it go ahead, the product will have to be sent for export to the Indian Subcontinent and other markets.


It is hoped that the new plant will find ready markets within Saudi Arabia. Benzene is a key ingredient for the styrene industry, which is expected to see long-term growth in the Saudi Arabian sector, although 2000 and 2001 may see a brief shortfall in demand. It is also hoped that the new plant can export cyclohexane to markets in the Far East and Europe.


The owner of the new plant is a 50/50 joint venture between Saudi Industrial Venture Capital Group and Chevron Chemical Corporation. This makes it Saudi Arabia's first entirely private chemicals manufacturing site. Chevron is a private US company with several decades' experience in the country. It hopes to set up a number of joint ventures using Aromax technology in markets with rapid growth rates. In the near future, these may include projects in Thailand and Venezuela. Saudi Industrial Venture Capital Group is a joint stock company of 61 Saudi businessmen and five joint stock companies that plans to develop the private-sector share of basic industries, such as petrochemicals, in Saudi Arabia.

The project is one of many petrochemical developments in the country in the past few years. The objective, from the Saudi Arabian point of view, is to diversify the Kingdom's economy. This helps to cushion it against low oil prices which severely affect the government's revenues. The petrochemical projects not only provide a wider range of products, they also move petrochemical operations in the Kingdom higher up the value chain, protecting margins. Another benefit is to provide jobs for Saudi Arabian nationals. To this end, the knowledge-sharing elements in the plant are welcome. Again, the government is eager to do this to limit social and political unrest as well as to develop the country.


Saudi Chevron Petrochemical managed to raise $305 million as part of its efforts to get the deal off the ground. The credit facilities were jointly arranged by a consortium of Chase Investment Bank, Gulf International Bank, the Industrial Bank of Japan, Saudi Cairo Bank and the Saudi Investment Bank.