World economy may run into more headwinds that reduce demand for oil products, CEO says
Saudi-based PetroRabigh is satisfied with refining margins at the moment, but the world economy may run into more headwinds that reduce demand for oil products, its chief executive said on Tuesday.
The company, a joint venture between Japan's Sumitomo Chemical and Saudi Aramco, produces an annual 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals.
"Right now we have very healthy crack spreads," he told reporters on the sidelines of an industry conference. He did not say whether he was referring to overall crack spreads or to a specific refined product.
Complex processing margins for Dubai crude in Singapore were around $8.93 per barrel, up from an average of the last five days of $8.89, Reuters data show. Over the past year, the average margin has been around $5.22 per barrel.
"Then environment we are in today is not what I would call a normal environment," Ziad Labban said.
Soaring oil prices, unrest in the Middle East and the effects of the tsunami and nuclear disaster in Japan all have the potential to slow down, if not derail, global economic recovery, he added.
The Rabigh project, located on the Red Sea coast of Saudi Arabia, integrates a petrochemical complex with a 425,000 barrel per day oil refinery and is part of Aramco's plans to build more such projects.
The refinery produces naphtha, gasoline, gas oil, fuel oil and other products.
Labban said potential bidders were now being invited to participate in a tender for construction of the second phase of the Rabigh project.
Work on the engineering phase is proceeding. and a final investment decision is expected by the end of this year.
PetroRabigh II will add 17 new plants and expand ethylene production by about 30 percent.
The existing 1.25 million tonnes-per-year cracker currently runs exclusively on ethane, but after the expansion it will run on both ethane and naphtha from the refinery, Labban said.
The refinery now produces 72,000 barrels per day of naphtha, all of which will be directed to ethylene production under the expansion.
Labban said the company was working to expand its product portfolio but declined to provide further details.
The firm has also allocated 75 percent of the space at its associated industrial park to 16 plastics processing firms, which will process resins produced by PetroRabigh.
Seven plants are already under construction at the site, Labban said.