Saudi Aramco and Sumitomo Chemical Co. have agreed to go ahead with a $7 billion expansion of the Rabigh II petrochemical project in the Kingdom, the Japanese firm said Friday. The project, which is due to start operations in early 2016, is a key part of Saudi plans to diversify its energy portfolio and boost earnings from downstream activities. Sumitomo "has confirmed the feasibility of the project and decided to move ahead by finalizing various project elements, such as agreement for engineering, procurement and construction and other projects contracts, as well as project financing," the company said in a statement. The Rabigh II Project, by expanding the ethane cracker and building a new aromatics complex, will use additional 30 million standard cubic feet per day of ethane and approximately 3 million tons per year of naphtha as feedstock to produce a variety of high value-added petrochemical products. The Rabigh II Project's main products will be ethylene propylene rubber (EPDM), thermoplastic polyolefin (TPO), methyl methacrylate (MMA) monomer, polymethyl methacrylate (PMMA), low density polyethylene/ethylene vinyl acetate (LDPE/EVA), para-xylene/benzene, cumene and phenol/acetone. With respect to acrylic acid, superabsorbent polymer (SAP), caprolactam, nylon-6 and polyols, Sumitomo and Aramco will continue to explore the best possible mode of operation to implement projects on those product lines, including possible collaboration with a third party. Aramco and Sumitomo signed an agreement on the plant expansion in 2009. At that time, contracts for the work were due to be announced by 2011. Under Rabigh II, an existing ethane cracker will be expanded and a new aromatics complex will be built using around 3 million tons per year of naphtha to make higher-value petrochemical products, Sumitomo Chemical said. Aramco and Sumitomo Chemical each hold a 37.5 percent stake in Rabigh Refining & Petrochemical Co, better known as Petro Rabigh, which owns the plants. Meanwhile, the GCC region's petrochemical production will scale up by more than 30 percent in the next four years on the back of sufficient feedstock and world-scale processing and export facilities, an industry expert said recently. GCC's petrochemical production would touch 149mn tons per year (tpy) by 2016 from 112mn tpy in 2011, Dr Abdulwahab Al-Sadoun, secretary general of Gulf Petrochemicals & Chemicals Association, said. “Saudi Arabia and Qatar are leading petrochemical and chemical industry development,” Al-Sadoun said. He said the Gulf region has become the “center of gravity” of global petrochemicals and chemicals industry. From cost perspective, the Gulf petrochemical and chemical producers are the “most cost-effective”. Sufficient feedstock (natural gas) availability and world-scale infrastructure, including production and export facilities, are the major reasons behind this. “Since the region cannot absorb its entire petrochemical and chemical production, the industry here is export-oriented. So the region requires world-class port and other logistics facilities to make sure the products are shipped to export markets, cost
