Saudi Aramco and China Petrochemical Corporation (Sinopec) signed a Memorandum of Understanding (MOU) related to the ongoing development of the Red Sea Refining Company (RSRC), a world-class, full-conversion refinery in Yanbu’ on the west coast of Saudi Arabia.
The refinery will process 400,000 barrels a day (bpd) of Arabian Heavy crude oil and produce high-quality refined products including 90,000 bpd of gasoline, 263,000 bpd of ultra-low sulfur diesel, 6,300 metric tons per day (MTD) of petcoke and 1,200 MTD of sulfur.
The new refinery will use existing Saudi Aramco facilities to receive crude oil and export refined products. It will include refinery process units, utilities and interconnecting piping, associated feedstock and refined product storage, as well as offsite facilities necessary to support safe and efficient operations.
The project is a new “grassroots” refinery at Yanbu’ that covers about 5.2 million square meters. It is scheduled to be operational in 2014.
Saudi Aramco and Sinopec have agreed to initially subscribe to equity interests of 62.5% (Saudi Aramco) and 37.5% (Sinopec) in RSRC should they proceed to formally participate in a joint venture. Development of this particular relationship with Sinopec in RSRC is a continuation of Saudi Aramco’s long-term strategy of making world-scale downstream investments following a massive upstream program that increased its crude oil production capacity to what it says is 12 million barrels per day.
The joint venture will also continue a partnership tradition between Saudi Aramco and Sinopec across the hydrocarbon value chain in Saudi Arabia and in China. Sinopec is Saudi Aramco’s partner (with ExxonMobil) in the Fujian Refining and Petrochemical Company Limited in Fujian Province, as well as in Sino Saudi Gas Ltd., one of the in-Kingdom gas exploration companies. Sinopec is also among Saudi Aramco’s largest crude oil lifters.
Sinopec and Saudi Aramco have developed a strong and long-term relationship, and have built concrete cooperation in refining, petroleum trading, and engineering services. The Red Sea Refining Company will open a new chapter in which Sinopec consolidates the complementary strategic partnership with Saudi Aramco through the downstream investment in Saudi Arabia. The project is a further step by Sinopec to expand its international operation by developing its overseas refining and petrochemical business, and to sharpen its competitive edge. It will also help Sinopec gain access to more energy sources and secure China’s energy supply.
—Su Shulin, President, Sinopec