By Asma Alsharif
Expansion expected to produce 17 new products, most of which will be exported.
Tenders for an expansion of Sumitomo Chemical and Saudi Aramco's joint venture PetroRabigh are expected to be floated by mid 2011, the company's chief executive said.
The founding shareholders of the $10 billion venture, also called Rabigh Refining and Petrochemical Co, are carrying out front end engineering studies in Japan, Ziad al Labban told Reuters in an interview.
He said: "If all goes well (tenders should be in) mid-2011."
Results of the studies are expected by the end of the year after which a final decision on the expansion will be made, he said. The expansion has been estimated to cost 25 billion riyals ($6.67 billion) but Labban said he could not confirm the figure.
The expansion is expected to produce 17 new products most of which is to be exported
PetroRabigh now processes 400,000 barrels of crude per day - about 19 percent of Saudi Arabia's total refining capacity.
The firm produces an annual 18 million tonnes of refined products, 75 percent of it used domestically, and 2.4 million tonnes of petrochemicals, 90 percent of which is exported.
Al Zabban said: "The gasoline, diesel, fuel oil and about 50 percent of the jet fuel are consumed domestically while the naphtha and approximately 50 percent of the jet fuel is exported."
PetroRabigh produces 60,000 barrels of gasoline a day and sells it all in Saudi Arabia.
PetroRabigh made a first quarter profit of 72 million on higher margins and one off items, but an increase in supply will see margins dropping toward the end of the year, Labban said.
He said: "The demand for petrochemicals started off strong at the beginning of the year ... There will be downward pressure on petrochemical margins when new facilities come on stream, particularly in the Gulf."
PetroRabigh plants are running at full capacity, except for the high density polyethylene (HDPE) plant, closed for maintenance but expected to be onstream in less than one month.
Labban said: "(The shutdown) will have minimal effects on Q2 or Q3 results due to high inventory levels of HDPE."
The plant will also undergo a routine test and inspection closure in April next year, Labban added. (Reuters)For all the latest Saudi Arabia news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.