Sadara Chemicals Complex, Saudi Arabia

Sadara Chemical Company is constructing a big chemicals complex in Jubail Industrial City in Al Sharqiya, Saudi Arabia. It will be located about 100km northwest of the Dammam city.

The fully integrated complex will consist of 26 chemical manufacturing units and be one of the largest of its kind in the world. It will produce about 1.5 million tons per annum (mtpa) of ethylene and about 400,000tpa of propylene.

The complex will also produce a variety of chemicals such as amines, propylene glycol, polyurethanes, low density polyethylene, linear low density polyethylene, elastomers, glycol ethers and propylene oxide.

These chemicals are used in the manufacturing of consumer goods, energy, transportation, packaging, electronics and furniture industries. The project is estimated to cost $20bn.

The complex is expected to generate revenues of about $10bn per annum within ten years from the start-up. The project is expected to generate thousands of direct and indirect jobs and attract several downstream investments.

Ownership and financing of the chemicals complex

The Jubail integrated chemical complex will be owned and operated by Sadara Chemical Company, a joint venture between The Dow Chemical Company (Dow) and the state oil company Saudi Aramco.

The two companies will hold equal stake in Sadara and fund about $7bn. An initial public offering (IPO) to raise equity for this amount is planned to be offered during 2013-14. The remaining $13bn will be in the form of loans from financial institutions and export credit agencies.

Background to the Saudi Arabian project

Dow and Saudi Aramco have been planning to establish and operate a world scale complex since 2007. The facility was planned to be located in Ras Tanura but later cancelled due to technical and financial difficulties. An extensive feasibility study and front-end engineering and design (FEED) were carried out before the final approval to build the complex at Al-Jubail was received in July 2011. The FEED was completed by KBR.

The Sadara complex is being built as part of Saudi Aramco's strategy to grow in the downstream markets. The company will oversee the execution and project management of the complex. The products will be marketed by Sadara in the Middle East zone.

Dow will supply the industrial processing technologies for the complex. The company will also be responsible to market the products in other parts of the world. The planned exports include about 45% to Asia, 10% to Europe and 25% to the Middle East.

Engineering, procurement and construction

The chemicals complex will be the first large-scale project to be constructed in a single phase. Sadara Chemical awarded engineering, procurement and construction (EPC) contract for the main mixed feed cracker to Daelim of South Korea in July 2011. The contract is valued at $920.3m. The flexible cracker will break the naphtha and ethane feedstock to produce about 3mtpa of chemical products and plastics.

Daelim is also reported to be the lowest bidder, against Samsung Engineering, for building parts of the other production units at the Sadara complex. They include analine, methylene di-para phenylene isocyanate (MDI), mononitrobenzene (MNB), toluene di-isocyanate (TDI), formaline, dinitrotoluene (DNT) units.

Fluor was awarded a $2bn EPCM contract in August 2011 for developing all the offsite work and utilities at the site. The scope of work will include development of associated infrastructure and pipework arrangements to allow the construction of the complex.

Construction work on the project will start in the third quarter of 2011. It is scheduled to be completed by early 2015. Production from the first units is expected to start in the second half of 2015. All the units are expected to be on line by 2016.

Feedstock used at Sadara Chemical Company's big chemicals complex

The complex will use ethane and naphtha derived from oil and natural gas liquids as feedstock.

The feedstock is cracked into propylene and ethylene at the cracker units.

The feedstock will be supplied from the Saudi Aramco Total Refining and Petrochemical Company's (SATROP) refinery which is currently under construction in Al-Jubail.

The refinery is expected to be fully operational by the fourth quarter of 2013. The raw materials will also be sourced from local refineries.

Feedstock for the propylene oxide unit will be supplied by a new hydrogen peroxide plant to be constructed by the 50:50 joint venture of Sadara Chemical and Solvay.