EIC INSIGHT REPORT

DOWNSTREAM
GCC MARKET FOCUS
May 2018
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This report has been produced by:

Dina Abieva, Sector Analyst – Downstream
Email: dina.abieva@the-eic.com

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CONTENTS

Introduction
page 4

Contracting activity
page 5

Major contracts awarded by region................... page 7

FEED contracts by country................................ page 9
EPC contracts by country................................page 11
PMC contracts by country............................... page 15
FEED contracting activity................................ page 16
EPC contracting activity................................. page 20
PMC contracting activity................................. page 24
Current opportunities and forecast................. page 25
Summary........................................................ page 32

Market focus:
Gulf Cooperation Council states
page 39

Overview: setting the scene............................ page 41

Supply-demand: refinery expansions
and product export......................................... page 44
Plant upgrades: Clean Fuel projects................ page 53
Diversifying portfolios: the GCC’s
petrochemical and chemical projects............. page 58
How are downstream projects
financed in GCC countries?............................. page 68
Successful EPC contractors............................ page 71
Future outlook.................................................page 74

Appendices
page 77
INTRODUCTION

The contracting activity part of the report provides The major contract types that are referred to are:
comprehensive comparison of contracting activity
between the financial years 2015–16, 2016–17 and • Front end engineering and design (FEED)
2017–18 in the global downstream sector. Major
contract awards since April 2017 are also discussed, • Engineering, procurement and construction (EPC)
including current and future opportunities. The data
used for the report has been taken directly from our • Project management consultant/contract (PMC)
EICDataStream database, which provides detailed
project information on approximately 1,100 oil and gas
active and future downstream developments globally. Notes

The report provides a general overview of the Asia includes projects in the Indian sub-continent and
downstream market and a brief analysis of the specific Australasia.
geographic locations where major contracts have
been awarded. It also includes an analysis of the most FY2015–16, FY2016–17 and FY2017–18 refer to
successful contractors by contract types, as well as financial years 2015–16, 2016–17 and 2017–18
looking at the project developers that have been the respectively.
most active in awarding contracts during the two most
recent financial years. Europe includes Russia and Azerbaijan.

The second part of the report includes a market

focus on downstream activity in the countries
where the Gulf Cooperation Council (GCC) operates.
The GCC consists of six Middle Eastern countries:
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and
the United Arab Emirates. These countries are
particularly focused on constructing new refining and
petrochemicals complexes, along with upgrade and
expansion developments, with aim to expand the
export of value added refined products and diversify
crude oil export.

4
CONTRACTING ACTIVITY
CONTRACTING ACTIVITY

New developments in the During the FY2016–17, a total in the previous financial year in
downstream sector are being of 326 contracts were awarded addition to the 18% decrease in
driven by regulatory requirements across 221 developments in Europe and 3% decrease in Asia
to meet cleaner fuel specifications 56 countries. In comparison, from FY2015–16. However, the
and also increase efficiency 379 contracts across 221 Middle East saw a 15% increase
and capacity of plants, to allow developments in 57 countries were in overall contracting activity
operators to benefit from high awarded during the FY2015–16. in FY2016–17 in comparison to
margins and to accommodate The shale revolution in the US has FY2015–16.
growing demands for refined, led to a boom in the development
chemical and petrochemical of the petrochemical market in The downstream market saw a
products. Theoretically, the the US, prime examples being 19.3% decrease in the overall
environment of low oil price observed in FY2015–16, with number of FEED, EPC and PMC
should have a positive effect on 95 contracts awarded, primarily contracts awarded between
the downstream sector because on new build petrochemical and FY2015–16 and FY2016–17. A total
of low feedstock cost and high expansion projects. The reduction of 155 major contracts (FEED,
demand for refined products. in the number of contracts EPC and PMC) were awarded in
The collapse in the crude oil awarded in FY2016–17 does 40 countries during FY2016–17, in
price had a significant impact on highlight a dip in contracting comparison 192 major contracts
the downstream sector and this activity in the US with only 55 in 45 countries were awarded
continued into 2016. contract awards, 42% less than during FY2015–16.

70 70.00

60 60.00
Number of major contract awards

50 50.00

40 40.00 Average crude oil price ( US$)

30 30.00

20 20.00

10 10.00

0 0.00
2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
FEED PMC EPC Average Crude Oil Price

Figure 1

Charting contracting activity against average oil price per calendar quarter.

6
Figure 1 shows number of major 50
contract awards from calendar
quarters Q2 of 2015 up until Q1 of 40
2018 vs average quarterly crude
oil price (US$); calendar quarters 30
Q2 2015, Q3 2015, Q4 2015 and
Q1 2016 represent FY2015–16,
20
calendar quarters Q2 2016, Q3
2016, Q4 2016 and Q1 2017
represent FY2016–17 and calendar 10
quarters Q2 2017, Q3 2017, Q4
2017 and Q1 2018 represent 0
FY2017–18. Overall the contracting Africa Asia Europe Middle East North South
activity follows the trend of the America America
crude oil price. FEED FY2015–16 EPC FY2015–16 PMC FY2015–16

In January 2016, the price of a

barrel of oil dropped considerably, Figure 2
the impact on contracting activity in
Contract awards by region FY2015–16.
the downstream sector was almost
instant causing a sharp decrease
in the total number of contract 50
awards made globally from 48 in
calendar Q1 2016 to 28 in calendar 40
Q2 2016. However, it should be
noted that another explanation for
30
the low number of contract awards
in the second calendar quarter
of 2016 (and calendar Q2 2015) 20
can be explained by the fact that
companies do not tend to award 10
major contracts at the beginnings
of the financial year, as the work 0
starts to pick up in the third quarter Africa Asia Europe Middle East North South
of the financial year, where the America America
most contracts are projected to be FEED FY2016–17 EPC FY2016–17 PMC FY2016–17
awarded. In summary, according to
EICDatastream as well as industry
sources, the calendar year 2016 Figure 3
has been the worst year since
Contract awards by region FY2016–17.
2012 in terms of contracting
activity, and the oil price, averaging
at US$44 per barrel of crude oil
in 2016. Signs of an upcycle have Major contracts two financial years. Overall
been observed from Q4 2016 and awarded by region major contracts awarded have
Q1 2017 with the oil price per reduced by 19.3%, with 192 major
barrel of crude oil increasing, as Figures 2 and 3 show the regional contracts awarded in FY2015–16
well as the number of contracts spread of FEED, EPC and PMC and 155 contract awards in
awarded. contracts awarded in the last FY2016–17. The number of FEED

7
CONTRACTING ACTIVITY

contracts awarded across the from 25 to 19, with a reduced was increased by one contract to
two periods decreased by 40%, number of EPC contracts in China, 27 in FY2016–17 in comparison
with 27 contracts awarded in Indonesia and South Korea and to FY2015–16; 27 EPC contracts
FY2016–17 compared with 45 no EPC activity in Vietnam during were awarded in the Middle
contracts awarded in the previous FY2016–17. East, the highest number of EPC
financial year. The number of EPC contracts awarded across all
contracts also decreased by about Europe regions in FY2016–17.
20%, with 103 contracts awarded
in FY2016–17 compared with In Europe, all three major North America
128 contracts in FY2015–16. In contracting activities have reduced
contrast PMC contracting activity by about 30%, mainly due to a Figure 2 shows that North America
increased by 32% across the decrease in FEED activity, from saw the highest number of EPC
two financial years, with 25 PMC nine to three FEED awards, a 67% contracts awarded across all
contracts awarded in FY2016–17 decrease. Six FEED contracts regions in FY2015–16, awarding
compared with 19 PMC contracts were awarded in Russia in 42 contracts in total, however,
the previous year. FY2015–16 with no FEED activity EPC activity reduced by almost
in FY2016–17. However, the EPC 43% in FY2016–17, mainly because
Africa activity in Russia has increased of the EPC activity decrease
in FY2016–17 from five to seven: in the US as well as no EPC
FEED contracting activity in Africa three projects have moved from awards being made in Mexico. Inc
has significantly reduced from the FEED in FY2015–16 to the EPC comparison seven EPC contracts
previous year to just five FEED stage in FY2016–17. were awarded in FY2015–16 in
contracts awarded in FY2016–17. Mexico. All 11 FEED contracts
In FY2015–16 nine FEED contracts The Middle East awarded in the region were for
were awarded mainly for the the petrochemical developments
development of new refineries in A similar trend was observed in in the US in FY2015–16, however,
Algeria and for the modernisation the Middle East, where major in the FY2016–17, only two
of refineries and the construction contracting activity has reduced FEED contracts were awarded
of a new petrochemical complex by about 10%, mainly due to a for an air separation unit at the
in Egypt. Following a successful decrease in FEED activity (from Claymont plant expansion and
completion of a FEED contract, 11 to 7 contracts). The number for a greenfield crude oil refinery
TechnipFMC has been awarded an of PMC contracts awarded was near Belfield, North Dakota, in the
EPC contract for the Alexandria reduced by one contract only to US and one FEED contract for a
Midor refinery expansion II project five. The number of EPC contracts biodiesel upgrade plant in Sombra,
in the same financial year. The Canada.
number of EPC contracts awarded
was the same in both years. South America

Asia Contracting activity

underperformed in both financial
The opposite trend was observed years in South America. No FEED
NORTH AMERICA SAW
in Asia, where the number of and PMC contract awards were
FEED contracts has doubled, the THE HIGHEST NUMBER made in either and although the
number of PMC contracts has also EPC activity doubled in FY2016–
significantly increased to six PMC
OF EPC CONTRACTS 17, only four EPC contracts were
contracts from just one contract AWARDED ACROSS ALL awarded in FY2015–16.
during the previous financial year,
however, the EPC contracting REGIONS IN FY2015–16 South American oil and gas
activity has reduced by 24% is dominated by national oil

8
companies (NOCs), whose existing projects forward is the
finances heavily deteriorated main reason behind the low
following the oil price crash in late contracting activity in the region.
2014. Financial difficulties are Unless these companies find new
being experienced by Ecopetrol partners (most likely Chinese, but
(Colombia), Petrobras (Brazil), British and US companies are also
IRAN’S NATIONAL
EP Petroecuador (Ecuador) , expressing interest in investing
Petroperú (Peru) and PDVSA PETROCHEMICAL in projects in South America),
(Venezuela), which are some of the the contracting activity in the
largest downstream players in the
COMPANY CURRENTLY region is not expected to improve
region. Multibillion projects such LISTS 50 PROJECTS UNDER significantly.
as US$6.5bn Barrancabermeja
refinery expansion (Colombia) and DEVELOPMENT, WHICH WOULD
the $12.5bn Eloy Alfaro (Pacifico) REQUIRE AN ESTIMATED FEED contracts by country
refinery and petrochemical
complex (Ecuador) have been CAPEX OF US$32BN Figures 4 and 5 show the regional
put on hold while others have spread of FEED contracts that
progressed very slowly e.g. the have been awarded between
US$5.4bn Talara refinery upgrade problems go beyond the financial FY2015–16 and FY2016–17.
project in Peru. difficulties driven by oil price. The The number of FEED contracts
state oil company, caught up in awarded globally dropped
Petroperú’s shareholders have a massive ongoing corruption from 45 in FY2015–16 to 27 in
recently approved a plan to sell scandal (The Car Wash corruption FY2016–17. As shown in Figures
up to US$3bn in bonds to help probe was started by the Brazilian 3 and 4, the FEED activity
finance the project in March 2017 police in 2014), has been forced has significantly dropped in
and since then the company has to cancel or postpone a number fossil fuel rich countries: the
started a pre-qualification process of key downstream projects. The US, Russia, the United Arab
to select an EPC contractor US$8.5bn Premium I refinery (Train Emirates (UAE), Saudi Arabia and
for the construction of the 1) and the US$11bn Premium II Oman. The last four countries’
refinery’s auxiliary units and other refinery projects were cancelled. budgets heavily depend on income
complementary works. The US$2.5bn Três Lagoas from oil exports. Low oil prices
Nitrogen fertiliser complex (UFN-III) have had significant impact
In FY2015–16, the EPC contracts and US$18.3bn Comperj refinery on the developments of new
were awarded for a Santa Marta were put on hold, which were downstream projects as well as
biodiesel plant and Sahagún gas almost complete. According to the on awarding FEED contracts in
compression station expansion company’s 2017-21 business plan, these countries. The US was the
in Colombia, and two refinery Petrobras was looking for partners top country awarding the highest
upgrade projects in Ecuador and to develop the project. In July number of FEED contracts in the
Venezuela. 2017, Petrobras and China National past few years, however, the FEED
Petroleum Corporation signed a contracting activity significantly
Contracting activity in FY2016–17 memorandum of understanding reduced in FY2016–17, with a
picked up in Brazil where four (MoU) for the creation of a 82% decrease. With the first
EPC contracts were awarded: strategic partnership between the wave of the new US crackers and
on a fertiliser expansion project, two companies. Local sources downstream projects starting up,
construction of a hydrogen indicate that the MoU includes the the capital spending in the US
peroxide plant and construction completion of the Comperj refinery. downstream sector has peaked
of two grassroots refineries, the and is heading down, hence a
Abreu e Lima refinery (RNEST) and The absence of new projects reduction in FEED activity. Fifty-five
the Comperj refinery. Petrobras’ and the NOCs’ difficulty in take downstream developments totaling

9
CONTRACTING ACTIVITY

12

10

0 an

an
ia
a

ait
t
A

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d
n
s

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ina
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te

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ta
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ss

es
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st
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Ka
ab

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Figure 4

FEED awards by country FY2015–16.

US$37bn have started-up or were for a petrochemical project in Western sanction are having a
expected to get commissioned Thailand. major effect on project executions
and start-up in 2017. For instance, in Iran. Many companies are having
Chevron Phillips Chemical Co Attractive feed gas price creates issues taking money out from the
has successfully completed competitive advantage for Iranian country, which is causing the delay
commissioning and begun start- petrochemical projects. As the EU of developments or projects. More
up of its new polyethylene units in and US nuclear related sanctions FEED contracts are expected to
Old Ocean, Texas. Each unit will were lifted in January 2016, Iran be awarded in Iran to develop the
produce up to 500,000 tonnes has seen the award of three FEED projects to take advantage of a
per annum to service the ever- contracts for the development direct access to the rich ethane
increasing global demand for of petrochemical projects, two content in the gas reserves at the
polyethylene. of which were awarded to local South Pars field and Khuzestan
contractors (Hampa Engineering province. International players,
Although overall FEED activity Corporation and Borzooyeh such as Total, are interested
reduced in FY2016–17, new market Petrochemical Complex). The third in developing petrochemical
entrants such as Iran and Thailand FEED contract was awarded to plants in Iran. Total and Iran have
have initiated developments of Linde Group for the development reached a preliminary agreement
new downstream projects and of the 12th Olefin and Aromatics to build three petrochemical
awarded FEED contracts: three project at the Assaluyeh Kian plants with a total capacity of
FEED contracts were awarded in petrochemical complex.. Iran’s 2.2m tonnes of petrochemical
each of these two countries in National Petrochemical Company and polymer products per year in
the FY2016–17. Two of the FEED (NPC) currently lists 50 projects a deal that if finalised would see
contracts were awarded for Thai under development, which would Total investing up to US$2bn in
Oil’s Sriracha refinery upgrades require an estimated capital Iran. However, the downstream
and expansion projects, and one investment of US$32bn. The projects in Iran are expected to

10
 12
11
10
9
8
7
6
5
4
3
2
1
0

t ia
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Az ola
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Ba
ab
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Sa
Ar
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Figure 5

FEED awards by country FY2016–17.

move forward only if they will be US$6bn Shell Franklin Monaca Seven EPC contracts were
granted a project waiver from the ethane cracker and the US$717m awarded in Mexico, six of which
secondary sanctions by the US Geismar petrochemical complex were awarded by Petroleos
with the support of the European expansion – Linear Alpha Olefins Mexicanos (Pemex) to develop
authorities. Unit projects. Shandong Yuhuang and upgrade its five refineries
Chemical Co. Ltd awarded two throughout the country to produce
EPC contracts on its US$1.5bn and supply diesel with a maximum
EPC contracts by country St. James Parish methanol sulphur content of 15 parts per
plant, phase 1 (which covers the million (reduced from 500 parts
Figures 6 and 7 show the regional methanol production unit) project, per million), which represents
spread of EPC contracts that have expected to be completed in Q4 a reduction of 97% to meet
been awarded between FY2015– 2019. Sasol North America Inc. environmental standards. The
16 and FY2016–17. The number of awarded one EPC contract on projects are part of the update and
EPC contracts decreased by about its huge US$11bn Lake Charles development plans that Pemex is
20%, with 103 contracts awarded ethane cracker and derivatives carrying out, with investments of
in FY2016–17 compared with 128 project, also expected to be US$2.8bn within the Fuel Quality
contracts in FY2015–16. completed by the end of 2019. project.
Lotte Group is also taking
The US dominated the EPC advantage of low-cost natural gas, Kuwait National Petroleum
market globally, seeing the awarding three EPC contracts on Company (KNPC) awarded five EPC
highest number of EPC contracts two downstream developments: contracts to several joint ventures
awarded during both financial the US$3bn ethane cracker and (JVs) on the development of five
years. In FY2015–16, Shell US$1.1bn Lake Charles mono- EPC packages for the US$15.5bn
awarded three EPC contracts on ethylene glycol plant, both located Al Zour refinery (aka the New
two project developments: the in Lake Charles, Louisiana state. Refinery project). Another EPC

11
CONTRACTING ACTIVITY

35
30
25
20
15
10
5
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Figure 6

EPC awards by country FY2015–16.

contract was awarded by KNPC by 23% from the previous year, significantly dropped in FY2016–
for the US$2bn Mina al-Ahmadi when 30 contracts were awarded 17, however, it should be noted
refinery fifth gas fractionation and for a mixture of new-build that the first wave of construction
condensate train; the gas train will petrochemical plants, upgrade of ethane crackers in Texas are
separate associated gas produced and expansion projects. In being completed in 2017.
in the north and southeast of the FY2016–17, ExxonMobil awarded
country into its basic components. four EPC contracts on three According to EICDataStream,
downstream developments: the by the end of 2017, the ethylene
Oman Oil Refineries and Petroleum Mont Belvieu Expansion project’s capacity in the Texas region was
Industries Company (ORPIC) is polyethylene production unit increased by about 2.7m tones per
constructing the US$6.4bn Liwa (to Wood Group), the Beaumont annum (MMtpa), with US$3.5bn
plastics plant, for which four Refinery Expansion – Crude capital spending on these
EPC contracts were awarded Flexibility project (Bechtel) projects; polyethylene capacity
for the development of four and the Beaumont Refinery was increased by 2.8MMtpa,
EPC packages. ORPIC has also Expansion project’s polyethylene with $6bn capital expenditure.
awarded an EPC contract to the JV production unit (Jacobs and The investments across Texas
for the development of the Sohar Mitsubishi Heavy Industries). and Louisiana by ExxonMobil and
refinery improvement project. Total awarded an EPC contract other major players including
to CB&I for the development of Dow Chemical, LyondellBasell
As shown in Figure 6, similar to the Port Arthur ethane cracker. and Chevron Phillips Chemical,
the global EPC market, the US LyondellBasell Industries awarded are focused on capturing the
saw a decrease in contracting an EPC contract to Bechtel for competitively priced feedstock to
activity in FY2016–17. A total the development of the La Porte produce more valuable products
of 23 contracts were awarded polyethylene plant. The EPC such plastics and chemicals for
during FY2016–17, decreasing contracting activity in the US export.

12
 30

25

20

15

10

C a an y
re
d A Aze r a n

Ge wait

u th n d
Sc re a
M a sia

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Nig ile

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Bra t

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Sin ntina

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Ind ates
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Alg a

Pa nd
Em ijan
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ite
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Figure 7

EPC awards by country FY2016–17.

ExxonMobil’s US$5bn Baytown liquefied natural gas (LNG) projects Saudi Arabian subsidiary Kentz,
olefins plant expansion including along the Texas and Louisiana an EPC contract for the expansion
a new ethane cracker and two coasts. of the asphalt production facilities
polyethylene plants and a new at the complex, which started
1.5MMtpa ethylene capacity, US ethylene and polyethylene commercial operations in 2017.
were originally expected to start projects expected to start-up in
production by the end of 2017. 2018 are detailed in Table 2. Post-sanctions Iran has advanced
However, construction on the its downstream developments,
cracker was halted during and In FY2016–17, EPC contracts were awarding eight EPC contracts in
immediately after Hurricane awarded in Saudi Arabia (12), Iran FY2016–17, four of which were
Harvey slammed into the Texas (eight), Russia (seven), Malaysia awarded on upgrade and expansion
Gulf coast. The project is now (seven), Egypt (four), Brazil (four), of refineries. Project financing
expected to be mechanically Oman (four), Azerbaijan (three) with remains the key issue in developing
completed in early 2018 and start one or two contracts in each of projects in Iran. The country
producing ethylene by mid-2018. the remaining countries (Figure 7). estimates that approximately
ExxonMobil’s multi-billion-dollar US$14bn of capital investment
expansion projects are part of Saudi Aramco awarded seven is required for the upgrade of
company’s broader Growing EPC contracts, four of which were five ageing refineries. In addition,
the Gulf initiative. The company awarded for the development contractors are having issues with
is planning to invest more than of the Ras Tanura refinery clean the banking system to transfer
US$20bn over 10 years to build fuels and aromatics project. The money out of the country, thus
and expand manufacturing US$19.3bn Sadara chemical contracts are suffering delays.
facilities in the US Gulf region. complex, a joint venture between
The expansion covers 11 major Saudi Aramco and Dow Chemical, Elsewhere, three out of seven EPC
chemical, refining, lubricant and awarded SNC-Lavalin, through its contracts in Russia were awarded

13
CONTRACTING ACTIVITY

Project name Estimated Operator Capacity (tonnes Product

value (US$m) per annum)
Channelview Ethylene Expansion II 500   LyondellBasell Industries 250,000 Ethylene expansion
Calvert City Petrochemical Plant 100 Westlake Chemical Corp 31,750 Ethylene expansion
Expansion – Ethylene
Corpus Christi Ethylene Cracker 420 LyondellBasell Industries 363,000 Ethylene expansion
Expansion
Freeport Ethylene Production Unit 1,700 Dow Texas Operations 1,500,000 Ethylene
(LHC-9)
Ingleside Ethylene Cracker Plant 1,250 Occidental Chemical 545,000 Ethylene
Corporation (OxyChem)
Gemini High-Density Polyethylene 500 Sasol/Ineos 470,000 Polyethylene
(HDPE) Plant – La Porte
Mont Belvieu Expansion – 2,000 ExxonMobil 1,300,000 Polyethylene
Polyethylene Production Unit
Sweeny Polyethylene Facilities – 3,500 Chevron Phillips Chemical 1,000,000 Polyethylene
USGC Petrochemicals Company

Table 1

Ethylene and polyethylene projects completed in the US in 2017.

Project name Value Operator Capacity (tonnes Product

(US$m) per annum)
Baytown Olefins Plant Expansion: New 5,000 ExxonMobil 1,500,000 Ethylene
Ethane Cracker and Two PE Plants
1,300,000 Polyethylene
Carlyss (Lake Charles) Ethane Cracker 175 Indorama Corp./Indorama 370,000 Ethylene
Renovation Ventures
Cedar Bayou Ethylene Plant – USGC 2,500 Chevron Phillips Chemical 1,500,000 Ethylene
Petrochemicals Project Company
Lake Charles Ethane Cracker and 11.13 Sasol North America USA 1,500,000 Ethylene
Derivatives
900,000 Polyethylene
Plaquemine Ethylene Plant 1,400 Shintech Inc 500,000 Ethylene
Point Comfort Plastics and Petrochemical 3,000 Formosa Plastics Corp. 1,590,000 Ethylene
Plant – Olefins 3 Expansion

Table 2

Ethylene and polyethylene projects to start-up in the US in 2018.

by Gazprom for modernisation of $27bn Refinery and Petrochemical refinery, cracker and petrochemical
the Moscow and Omsk Refineries. Integrated Development (RAPID) operations, and the investor will also
Five out of seven EPC contracts in Pengerang. In early 2017, it was supply at least 50% of the crude that
in Malaysia were awarded by announced that Saudi Aramco will be processed at RAPID, with an
Petronas for the development of would buy a stake in RAPID’s option to increase the supply.

14
 3
PMC contracts by country

In contrast PMC contracting

activity increased by 32% across
the two financial years, with 2
25 PMC contracts awarded in
FY2016–17 compared with 19
PMC contracts the previous year.
1
PMC activity in India, the US and
Russia increased in FY2016–17,
while PMC contracts were
awarded in new markets such as 0
Iran. Figures 8 and 9 show the
Ba n
a

t ia

Fin o
To pt

ia
Be A
ium

ia

d
ud ijan

Cr o

q
regional spread of PMC contracts
a
bi

la n
g
ai

Ira
ale
US

ic

ss

Ind
d Egy
Om

oa

ba
ra

hr
Sa rba

ex
lg

Ru

W
iA

that have been awarded between M

e
Az

&
FY2015–16 and FY2016–17.

da
ini
Tr
Azerbaijan’s NOC, SOCAR
has granted a contract to the
SOCAR-KBR LLC JV to provide
PMC services for the ongoing Figure 8
modernisation and expansion
PMC awards by country FY2015–16.
of the Heydar Aliyev refinery in
Baku, Azerbaijan. Fluor served
as a general contractor during
the basic design works. Another 4
PMC contract was awarded to
Neste Jacobs by SOCAR for
the development of the new 3
US$920m Urea plant in Sumgait.
All three PMC contracts were
awarded during the FY2015–16. 2
Only one PMC contract has been
awarded during the FY2016–17
in Azerbaijan. SOCAR-KBR LLC 1
JV has been selected as a
PMC contractor by Azerikimya
Production Union to modernise 0
the ethylene-polythylene plant in
Sw n y
ng sia
d

a s
Al n
ia

C a ia

Jo n
er a

Ice s
Em sia
Ru a

Ar ndo n

en
Ge e sh
Ira

te

ale
ri

ija

lan
Az n ad

a
US

ss
Ind

a
rd
ge

ed
Ba lay
ir a
ab ne
ba

rm
d

Sumgayit, Azerbaijan.
W

la
M
I

Two PMC contracts were awarded

d
ite

in Saudi Arabia in FY2015–16.

Un

Jacobs was selected by IDEA

Soda Ash & Calcium Chloride
Company for its soda ash and Figure 9
calcium chloride plant in Jubail and
PMC awards by country FY2016–17.
TechnipFMC has been selected by

15
CONTRACTING ACTIVITY

Farabi Petrochemicals company Indian Oil Corporation awarded resources. Later, the sanctions
for a petrochemical plant in PMC contracts for its Koyali were expanded to target
Yanbu. There have not been any refinery expansion and upgrade Russia’s largest oil producers
PMC awards in Saudi Arabia in and Panipat refinery expansion and downstream developers,
FY2016–17. projects. Hindustan Petroleum Rosneft and Gazprom’s oil
Corp. Ltd awarded PMC contracts subsidiary Gazprom Neft,
Oman saw the award of two PMC for Vizag refinery expansion as well as national pipeline
contracts for the development project. operator Transneft, restricting
of a Salalah liquefied petroleum the companies’ access to EU
gas (LPG) extraction plant and In the US, three PMC contracts capital markets. Although, EU
the Sohar Refinery Improvement were awarded for the development sanctions normally expire after
project during the FY2015–16. of new chemical plants. Two a year, energy sanctions against
PMC contracts were awarded to Russia were prolonged to the
Bahrain, Croatia, Egypt, India, Iraq Jacobs for the development of a end of January 2018. Following
and the US have each awarded propanol plant in Bay City by OXEA these sanctions, Chinese
one PMC contract for refinery and for a monoethylene glycol contractors successfully bid for
upgrades and expansions. plant in Oyster Creek, Freeport by work in Russia, in particular China
MEGlobal. One PMC contract has National Chemical Engineering
In 2016, the Indian government been awarded to WorleyParsons Corporation which was awarded
announced that the country would for the propylene oxide and a PMC contract for the Afipsky
adopt Bharat stage emission tertiary butyl alcohol plant in Refinery Modernisation project by
standards, BS-VI by 2020. The Channelview by LyondellBasell NefteGazIndustriya.
standards are based on European Industries.
regulations on the output of air
pollutants from engines. Iran also saw the award of three FEED contracting activity
PMC contracts, two of which were
During the FY2016–17, India’s awarded for the development of Amec Foster Wheeler (part of
NOCs awarded four PMC contracts petrochemical complexes and one Wood Group since October 2017)
for upgrade and expansion for development of a refining park was the highest ranked FEED
of refineries to meet these gas condensate complex. contractor in both financial years
regulations as well as to meet the 2015–16 and 2016–17.
demand for processed crude oil, Algeria’s Sonatrach awarded two
such as diesel, gasoline and jet PMC contracts for development In FY2015–16 Amec Foster
fuel. of a petrochemical plant and a Wheeler was awarded five FEED
refinery in Skikda. contracts in Africa (three), Asia
(one) and North America (one).
Russia also awarded two PMC Amec Foster Wheeler’s three FEED
contracts for modernisations of contracts in Africa were awarded
two refineries: the Afipsky refinery, by Sonatrach for the developments
operated by NefteGazIndustriya of the Biskra, Hassi Messaoud
and the Moscow refinery operated and Tiaret refineries in Algeria. A
by Gazprom Neft. JV between Amec Foster Wheeler
PMC ACTIVITY IN and SOCAR also received a FEED
INDIA, THE US AND The EU imposed energy contract for the development of
sanctions on Russia in July 2014 the Heydar Aliyev Baku oil refinery
RUSSIA INCREASED when it limited Russia’s access in FY2015–16.
to European technology and
IN FY2016–17 services for developing Arctic, Amec Foster Wheeler’s More 4
deepwater and unconventional oil Less approach definitely boosted

16
 6

F o rpor g…
r W on
r
c h B&I

t
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Ja R

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Flu C (N obs

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r T O)
tel

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Am

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Figure 10

Top FEED contractors during FY2015–16.

the company’s contracting activity, tactical cost avoidance. Amec However, Wood Group’s £2.2bn
even during these challenging Foster Wheeler’s More 4 Less takeover of Amec Foster Wheeler
times, helping the company to win approach was introduced to stay should bring key strengths to its
six FEED contracts in FY2016– competitive in this challenging downstream activity, including
17. Three in Asia (the Jurong market. The approach entails a strategy to reduce its heavy
refinery expansion, the Sriracha reducing manhours, unit rates, reliance on the volatile upstream
refinery and the Sriracha refinery energy usage, utilising multi-skilled oil and gas markets.
expansion),two in the Middle East employees, increasing efficiency
(the Al Zour Facility Integration and producing more products. In FY2015–16, CB&I won five FEED
project and the Ruwais refinery contracts: two in North America,
complex – gasoline and aromatics Wood Group, was awarded two and one each in Africa, Asia and
project), and another FEED FEED contracts in FY2015–16, the Middle East.
contract awarded by Sonatrach in for the redstone linear alpha
Africa. olefins plant and the West Texas As part of the FEED contracts,
renewable and gas monetisation CB&I also provides technology/
The environment of low oil prices project in North America, while licensing for units. For instance,
has exerted significant pressure in FY2016–17 it was awarded no CB&I has been awarded with the
on oil and gas operations. The FEED contracts. Wood Group’s basic engineering design and
immediate reaction from the downstream petrochemicals and licence for the ethyl benzene/
industry was to drive cost out refining activities suffered during styrene plant, part of the Tahrir
of the supply chain through the low oil price environment. complex in Egypt. The company

17
CONTRACTING ACTIVITY

0
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s
s

s
d
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da

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Lt

tio
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KB
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va
bo
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at
pF

Ax
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rs

ra
Gr

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a
he

om
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La
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ar
or

Ja
u

or

ie
Pa
Ind
ni

o
Te e r W

Re

rin de

oc

C-
p

rp

S
En ec h

lC
rp
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e
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ley

st
Co
s

Co
dr
Co
as

ica
er
ee

or

Ne
T
st

Hy
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ne

o
or

em
gin
Fo

W
g
cn

m
Flu

e
gi

it o
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ch
rg
En
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m
Am

tro
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gin

Su

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To

En

.;

h
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Ha

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ar

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JV

Figure 11

Top FEED contractors during FY2016–17.

was previously awarded a contract CB&I’s financial strength and in Egypt; in Europe (one) for the
for the licence and engineering flexibility by eliminating most of reconstruction of the Sumgayit
design of the polypropylene unit at its debt and reinvesting in its ethylene-polyethylene plant in
the Tahrir complex. engineering and construction, Azerbaijan; in the Middle East
and fabrication services (one) for the Yanbu petrochemical
CB&I did not receive any FEED businesses. Following approval plant in Saudi Arabia and in North
contracts in FY2016–17, however, of the merger deal between America (one) for the Belmont
three technology/licence contracts McDermott International and CB&I County ethane cracker in the US.
were awarded for projects in Asia. in May 2018, CB&I’s business TechnipFMC’s activity reduced in
that provides proprietary process FY2016–17, with only two FEED
In August 2017, CB&I announced technology licences, associated contracts in Bangladesh (one) and
its intention to sell the company’s engineering services, catalysts in Azerbaijan (one).
Technology business, a business and engineered products will use
that consistently generates very the Lummus brand name. In FY2015–16 Bechtel received
attractive margins with minimal two FEED contracts, one in Africa
capital requirements. CB&I Technip (now TechnipFMC) received for the development of the Tahrir
believes the technology business four FEED contracts in FY2015–16, petrochemicals complex in Egypt
is undervalued as part of CB&I, awarded in four regions: Africa and one in Asia for the Balikpapan
so the divestment of the business (one) for the second expansion refinery expansion and upgrade in
is aimed to significantly enhance of the Alexandria Midor refinery Indonesia. Bechtel was awarded

18
with another FEED contract
as part of a joint venture with MORE 4 LESS
Japan Gasoline Corporation and Amec Foster Wheeler’s More 4 Less methodology focuses on efficiency,
Samsung Engineering America for challenging assumptions and driving new ways of thinking (copy designs,
the engineering design and cost do one, build many, modularisation and efficient information hand over)
estimate of the Belmont County to deliver more work for less cost.
ethane cracker. No FEED activity by
Bechtel was observed in FY2016–17. The approach is focused on:

KBR and Fluor had a similar trend • Cutting spend – spending less on non-value execution. Eliminate waste
of FEED contracts in both financial early and focus on high value scopes
years. In FY2015–16 KBR received
two FEED contracts, one in Europe • Assuring efficient delivery – remove inefficiencies in planning and
for the Togliatti Fertliser Units execution, leading to sustainable efficiency improvements
Revamp project in Russia, and
another in North America for the • Reducing headcount – review organisation (contractors and wider
Opteon facility at the Corpus Christi supply chain) and culture
Ingleside petrochemical complex.
KBR’s FEED activity reduced in • Enhancing operations – define areas to improve production
FY2016–17, with only one FEED opportunities
contract in Asia for the Daesan
naphtha plant in South Korea. The company’s approach to efficient FEEDs is to develop the essential
technical definition to enable the next phases, applying a pragmatic
Fluor received two FEED contracts approach and highlighting potential areas of saving during the FEED
in FY2015–16. One in the Middle tendering process. As a result, 34 cost reduction initiatives have been
East and one in North America. implemented:
The company was also awarded
another FEED contract, leading • Reduction in modification delivery duration from 20 weeks to 4–5
a consortium consisting of SK weeks
Engineering & Construction and
Technip for the engineering design • 40% reduction in hours to complete tasks
and cost estimate of the Belmont
County ethane cracker. Fluor’s FEED • 60% less onshore construction hours to produce work packs
activity also reduced in FY2016–17,
with only one FEED contract in • 20% reduction in hourly costs, reduction in overall costs by 50%
Asia for the Ningbo chemical
manufacturing facility in China. • Increase in modification completion ration by over 40%

Técnicas Reunidas received two • 40% improvement in engineering to construction man hour ratio
FEED contracts in FY2015–16, in
Africa (one) and Europe (one).
the development of the Borouge 3 years FY2015–16 and FY2016–17
In both financial years and Borouge 3- Polyethylene Plant respectively, Amec Foster Wheeler’s
WorleyParsons received one FEED Modification project. In FY2016–17, network of locations in more
contract in the Middle East. Neste Jacobs was awarded one than 55 countries worldwide has
FEED contract in Europe. facilitated the provision of at least
In FY2015–16 Neste Jacobs one FEED service in every region
received two FEED contracts in the To summarise, successful FEED across the globe in both financial
Middle East, both in the UAE for contractors by region in financial years. Petrofac has been active only

19
CONTRACTING ACTIVITY

d
R
er
&I

gin c

g
n
s

pA
Pe s
n

Pr u or
ng n t

Pu u p
c
MC

ion

oy
ob

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rin
n
t io

fa
ida

KB
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CB

el

t io

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at

Fl
v
pF

Ll
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he

a
ac

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Gr
Gr
un

i
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xa
or

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t
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cn

nj
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W
Re

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de
C
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rp
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ch

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im
Te

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er

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su

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Te

as

cn
S

st

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m
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o
da
air
Fo

Te
or

oy
Sa
cn

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e
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A;
T
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Ch

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Am

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no
ch
Te
s
tic
ine
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T
:K
JV

Figure 12

Top EPC contractors during FY2015–16.

in the Middle East. TechnipFMC has In FY2015–16, TechnipFMC was in: Europe (two), the Middle
also been actively providing at least awarded six EPC contracts: three East (one) and North America
one FEED service in every region. in North America, one in Africa and (three), however, its EPC activity
two in Europe. In FY2016–17, the reduced in FY2016–17, with
CB&I, Fluor, Bechtel, Jacobs and company’s EPC activity reduced, only two EPC contracts: one in
KBR are the most successful with only three EPC contracts Europe for engineering design
contractors providing FEED awarded: two in Europe and one in and construction of the Pancevo
services in the US – these the Middle East. TechnipFMC was refinery delayed coker unit in
contractors are also active in the awarded an EPC contract for the Serbia and one in North America
Middle East, Africa and Asia. Sumgayit ethylene-polyethylene to provide EPC services for
plant reconstruction in Azerbaijan, Total’s Port Arthur ethane cracker.
following successful completion CB&I’s EPC contract is valued at
EPC contracting activity of FEED contract in the previous approximately US$1.3bn which
financial year. was awarded following successful
Figures 12 and 13 show successful completion of FEED. The project
contractors that have been awarded CB&I, one of the top FEED is also using CB&I’s ethylene
with at least two EPC contracts in contractors in FY2015–16, has technology. The final investment
the last two financial years. received six EPC contracts decision (FID) for the project has

20
 7

s
ing

s
el
bs
lin

R
er

&I
ing

ny
n

MC

ion
as

ro
on

ida
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t

KB

CB
va

co

el

pa
ch

er

ub
er

IG

at
ipF

rs
ra

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un
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Ja

ne
Be

m
ne

IP

or

To
Pa
po

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(N

rp
ch

gi
C

g i
or

ley

&
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SN

En

Co
En
Te

as
ing
C

en
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t

JS
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n

m
KP
or

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ct

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iso

cn
a

leu
Flu

La
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tk
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nt
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ab

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pe

na
rtn

tio
az

Pa
Ig

Na
P

&
NI

ina
a
sm

Ch
Ne

Figure 13

Top EPC contractors during FY2016–17.

been delayed from 2017 and was Amec Foster Wheeler, the highest only one EPC contract in FY2015–
finally received in Q1 2018. ranked FEED contractor, received 16 for the construction of Shell’s
four EPC contracts in FY2015–16: Franklin Monaca ethane cracker in
In FY2015–16, Técnicas Reunidas three in Europe, including one EPC the US through a JV called Great
was awarded five EPC contracts: contract for the Stanlow Refinery Arrow Builders who will supply the
three in the Middle East and Upgrade and Expansion project in direct hire labour and field non-
two in North America. Two EPC England and one EPC contract in manuals. However, in FY2016–17,
packages worth US$3bn were North America. In FY2016–17 only Bechtel received three EPC
awarded by Saudi Aramco for the three EPC contract were awarded contracts: two EPC contracts in
Al Fadhili gas plant. Only two EPC to Amec Foster Wheeler, one each North America for the Beaumont
contracts worth US$1.5bn were in in Europe, Asia and Africa. Wood refinery expansion – Crude
awarded to Técnicas Reunidas in Group has received only one EPC Flexibility project by ExxonMobil
FY2016–17 – both contracts were contract in North America in both and for La Porte polyethylene
awarded for two EPC packages financial years. plant by LyondellBasell Industries;
for the engineering design and and one EPC contract in Africa
construction of the Ras Tanura Bechtel, conversely, has managed for the Tahrir petrochemicals
Refinery Clean Fuels and Aromatics to increase its EPC contracting complex by Tahrir Petrochemicals
project in Saudi Arabia. activity. The company received International.

21
CONTRACTING ACTIVITY

SNC-Lavalin also increased its Al Zour Refinery project 5

four FY2015–16 EPC contracts Hanwha Engineering and Construction; Sinopec Engineering Group (SEG); 1
(Africa [two], North America [one] Técnicas Reunidas SA
and South America [one]) to seven Daewoo Engineering & Construction; Fluor Corporation; Hyundai Heavy 1
EPC contracts in FY2016–17: three Industries (HHI)
in the Middle East, one in North Hyundai Engineering & Construction Co Ltd; Saipem SpA; SK Engineering 1
America, one in Asia, one in South & Construction (SK E&C)
America and one in Europe. Essar Group; Saipem SpA 1
Fluor Corporation; Hyundai Heavy Industries (HHI) 1
Maire Tecnimont received four Liwa Plastics project 2
EPC contracts in FY2015–16:
GS Engineering & Construction; Mitsui & Co 1
two in Europe for the Kingisepp
CB&I; CTCI Corporation 1
ammonia and urea plant in
Russia and the Gdansk Refinery Sohar Refinery Improvement project 1
Development and Modernisation EMC Group; McNally Bharat Engineering Company Ltd (MBE)  1
project in Poland; one in North
America for the St John fertiliser
plant in the US; and one in the Table 3
Middle East relating to one of
Successful EPC contractors executing major projects in Middle East.
the four packages comprising
the Liwa plastic complex in
Oman. In FY2016–17 Tecnimont
received two EPC contracts: one Jacob’s EPC contract awards North America; KBR was awarded
in the Middle East for the Rabigh were focused mainly in North an EPC contract for the Corpus
Refinery Clean Fuels project in America, Asia and also in Europe. Christi Petrochemical Complex’s
Saudi Arabia and one in Asia In FY2015–16 Jacobs received four opteon facility in the US following
for an EPC lump sum turnkey EPC contracts in Asia (two) and successful completion of FEED
contract, valued at US$328m, North America (two). In FY2016–17, in the previous financial year. In
which was awarded to Tecnimont Jacobs maintained its EPC activity, FY2016–17, Samsung Engineering
Group, as part of a JV with China with four EPC contracts: three in was awarded with an EPC contract
Huanqiu Contracting & Engineering North America for the polyethylene worth US$110m to build a gas
Corporation for the Pengerang production unit at the Beaumont compressor station at Wang Noi,
refinery and petrochemical refinery, on the Greenville County Thailand.
integrated development in polyester film expansion and
Malaysia. Tecnimont, also signed Redstone linear alpha olefins plant; In FY2015–16 Petrofac received
a collaboration agreement for and one EPC contract in Europe for two EPC contracts, both in the
the Kingisepp ammonia and urea the engineering and construction Middle East for the Al Fadhili gas
plant in Russia, with the client of the Gelsenkirchen Refinery plant in Saudi Arabia and a gas
Eurochem and with the Russian Hydrotreater Upgrade project – the dehydration plant in Bahrain. No
construction company Velesstroy. contract is being carried out under EPC contracts were awarded to
This agreement confirms the a strategic supplier framework Petrofac in FY2016–17. 2016 was
commitment to ammonia plant agreement with BP. a tough year for Petrofac but the
construction collaboration, with company has seen improvements
Tecnimont (as EPC contractor, In FY2015–16 Samsung Group in bidding recently and these
contract awarded in 2015) and KBR were both awarded encouraging signs give the
currently engaged in the Kingisepp three EPC contracts each, all in confidence that Petrofac is well
project. The construction sub- North America. KBR’s activity positioned to rebound. Petrofac is
contracts have a total value of reduced in FY2016–17, with only now looking for more downstream
approximately US$228m. two EPC contracts awarded in investment opportunities such

22
as creating a JV with a more In previous years, East Asian 1 contractors will be selected to
established petrochemical contractors were successful in execute the projects.
company to help capture more of being awarded contracts without
the value chain. forming JVs for projects in the In FY2015–16, 8 out of 26 EPC
Middle East. These companies contracts in the Middle East were
In FY2015–16, Fluor received two were securing lump sum contracts awarded to JVs; five JV contractors
EPC contracts, in Europe (one) and by placing the lowest bid price, were successful in getting an EPC
North America (one), in addition, however, most of these East contract from KNPC for the Al
as part of the ICA Fluor JV, it Asian contractors have been Zour Refinery (Table 3).
was awarded two more PMCs in unsuccessful in executing the
North America to provide detailed projects as per the agreed Canada’s SNC-Lavalin received
engineering, procurement, schedule and cost. Delays and EPC contracts in both financial
construction services for two cost overruns made East Asian years. China National Petroleum
refinery developments in Mexico. contractors seem unreliable to Corporation and a JV between
Fluor’s EPC activity also reduced project developers in the Middle Hyundai Engineering &
in FY2016–17, with three EPC East, consequently East Asian Construction, Hyundai Engineering
contracts, one each in Africa, contractors have formed new Company and Toyo Engineering
North America and South strategies to secure contracts Corporation were successful
America. in the region. JVs with Western in securing EPC contracts
companies are formed to in Azerbaijan and Russia,
To summarise successful EPC improve quality, schedules and respectively.
contractors by region, in FY2015– commitment to initial plans.
16, the majority of EPC contracts Western engineering companies The formation of JVs has
in North America, Europe and also provide technical expertise, significantly reduced in Asia
South America were awarded to a whereas East Asian contractors as and the Middle East. Local EPC
single engineering company. The well as technical expertise, provide contractors such as Saudi Arkad
most active contractors in the labour and the financing for most Engineering & Construction
region are TechnipFMC, Samsung projects in Middle East is secured Company, UAE’s Al Hassan
Group, US contractors such as from Asian banks. Engineering Co, Oman’s Galfar
CB&I, KBR, Fluor, Jacobs, Bechtel Engineering & Contracting,
and also Japanese engineering South Korean companies have Kuwait’s Gulf Spic Contracting
contractors such as Mitsubishi been very successful in the region Company WLL were successful
Heavy Industries and Toyo due to the financing they bring in getting contracts related to
Engineering. Asian engineering with them. South Korean massive smaller EPC packages e.g. the
contractors have not received any conglomerates such as Samsung construction, partial procurement
EPC contract award in Europe. Group, Hyundai Group and SK and commissioning support,
Group, also known as SK Holding, construction of offsites and
The most successful EPC are comprised of a number of utilities, pipeline packages in
contractors in Asia and the Middle different subsidiaries and affiliates the Middle East. South Korean
East are the ones that have in a variety of industries, providing contractors such as Daelim
formed a JV with other engineering high cash reserves. Most of the Industrial Co Ltd, Hyundai Group
firms. In Asia, the majority of Middle Eastern projects executed and PIELDS Engineering Co. Ltd
JVs formed include Japanese fully or partially by South Korean were successful in getting an
and South Korean contractors, contractors are also financed by EPC contract without forming a
whereas in the Middle East, the South Korean banks in addition JV. South Korean banks including
majority of JVs are between South to cash reserves from country’s South Korea’s export credit
Korean and Chinese contractors conglomerates. Japan and China agency, the Export-Import Bank
in collaboration with Western are also keen to finance projects in of Korea, provided loans to
engineering firms. the Middle East, so that their Tier finance the projects, providing

23
 6

CONTRACTING ACTIVITY
5

more advantage to South Korean 3

EPC contractors to secure the
contracts. Only 3 out of 27 EPC 2
contracts were awarded to JVs
for projects in Iran – these JVs 1
consisted of only East Asian
with local Iranian contractors 0
and did not include any Western

R
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TE s

GE

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engineering contractors.
b

on

tio

KB
ob

ley tio

AR CN

JS
co

o
M Po R L

H
l C pF
r
rs

ra
c

Di er G

a
T

C
Ja

na hn i

po

tk
-K
e

AN rn
st

se

ra
C
or
Ne

T
e
C

re
or

SO

pe
PMC contracting activity
Flu

az
na

g
er

PI
NI
Int
Neste Jacobs was the most

o
nic
;U
successful contractor in FY2015–
ip
16 (Figure 14), receiving three PMC hn
ec
;T

contracts in Europe in Azerbaijan,

VC
UJ

Croatia and Finland. However, it

didn’t manage to replicate this
form in FY2016–17 and received Figure 14
no PMC contracts. In October
Top PMC contractors during FY2015–16.
2017, it was announced that
Jacobs Engineering had sold its 6
40% interest in Neste Jacobs Oy,
following this transaction, Neste 5
Corp. holds all shares in Neste
4
Jacobs Oy and as of January 2018,
Neste Jacobs Oy was renamed to
3
Neste Engineering Solutions Oy.
2
In FY2015–16 Jacobs separately
received two PMC contracts, one 1
in Europe and one in the Middle
East. Jacobs’ PMC contracting 0
activity increased in FY2016–17,
na ng A ar r

lt i s u p

zp ca in l
he er Ga n s

Re BB
er ol r s
d

s
a n ro P ine rs
W r W obs

Co u ry n g

C
KB a n
al a n td.

ka s
ga ni ng a
P le

C A Na C

ida
ot on
Lt

LL
PI ch E ob
g e

winning three awards – two in North

er l S ee
AM ns u mu Gro

JS
l C ine lta so
ley ee

R- rg

A
d n L öy eri
m sM s L
En a g
te ac
ia

ab u ti
NI Te ng Gl

un
R
or h
Ind

America and one in the Middle

s

as
er

m
s

East. The sale of Jacobs’ interest in

ic
ne

Fo

SO

cn
ic
gi

ec

Te

Neste Jacobs Oy formed part of the

En

Am

tio g E

v
ym he

company’s strategy outlined in 2016

Na lt in

Ra C
ina s u

to grow profitably through organic

C h on C

growth, acquisitions and active

an
n
ra

hr
va

portfolio management that positions

Te
m
Na

Jacobs in the most attractive

end markets and geographies. In
December 2017 Jacobs Engineering
Group Inc. completed its acquisition Figure 15
of CH2M via a cash and stock
Top PMC contractors during FY2016–17.
transaction. The combination,

24
which received broad affirmative In FY2016–17, Amec Foster and PMC) were awarded in both
support from CH2M shareholders, Wheeler received a PMC contract consecutive financial years. A
is expected to drive the company’s from Pertamina for the Cilacap total of 154 major contracts
profitable growth strategy further. refinery expansion and upgrade in were awarded in 47 countries
Indonesia. In the same financial year, during FY2017–18, and 155 major
In FY2015–16 WorleyParsons Técnicas Reunidas received a PMC contracts in 40 countries were
received two PMC contracts: one contract from Sonatrach for project awarded during FY2016–17.
in Africa for the AsyutRefinery management services for the Skikda
Modernisation project in Egypt refinery in Algeria. Murphy Oil Corp. In FY2017–18 it was observed
and one in the Middle East for the awarded ABB with a PMC contract that FEED and PMC activities have
Sitra refinery upgrade in Bahrain. for the Milford Haven Refinery significantly reduced across all
It received the same amount of Decommissioning project. These regions except in Europe. About
PMC contracts in FY2016–17: one contractors were not awarded any the same number of FEED and
in the Middle East for a potash and PMC contracts in FY2015–16. PMC contracts was awarded
phosphate fertiliser plant in Jordan in Europe with a total of three
and one in North America for the NIPIgazpererabotka JSC received FEED contracts and eight PMC
Channelview propylene oxide and one PMC contract in both financial contracts. Western Europe
tertiary butyl alcohol plant in the US. years, for the Amur gas processing has been upgrading its ageing
plant from Gazprom and for the refineries e.g. contracts have
The SOCAR-KBR JV received one Moscow oil refinery from Rosneft. been awarded to Total’s Donges
PMC contract in Azerbaijan in both refinery, and ISAB S.r.l.’s Priolo
financial years: from SOCAR for As Figure 15 shows the most Gargallo Refinery, whereas Eastern
the Heydar Aliyev Baku oil refinery successful PMC contractor in Europe is planning to construct
modernisation (FY2015–16) and FY2016–17 was Engineers India new chemical/petrochemical
from Azerikimya Production Ltd which was awarded six PMC plants to reduce its product import
Union for the Sumgayit ethylene- contracts: four in Asia, one in the dependencies.
polyethylene plant reconstruction Middle East and one in Africa. The
(FY2016–17). four PMC contracts in Asia were EPC activity increased by 121% in
for refinery upgrade and expansion Asia with 42 contracts awarded in
In FY2015–16 Man Diesel & Turbo, projects by Hindustan Petroleum FY2017–18 and just 19 contracts
TECNA, TechnipFMC and a JV Corp. Ltd on the Vizag refinery and awarded in FY2016–17, by 44% in
between TechnipFMC and Unico Indian Oil Corporation’s Panipat Europe with 23 contracts in FY2017–
International Corp, were awarded refinery and Gujarat refinery 18 and 16 contracts in FY2016–17,
one PMC contract each in projects following successful completion EPC activity also inceased in North
in the Middle East. However, these of configuration study for the America by 33% with 32 contracts
contractors were not awarded any facilities required to make the in FY2017–18 and 24 contracts in
PMC contracts in FY2016–17. refineries BS VI compliant. FY2016–17. However, EPC activity
reduced in South America by 75% to
CH2M, GE and KBR were awarded just two EPC contracts in FY2017–
one PMC contract each in North Current opportunities 18. A reduction in EPC activity was
America in FY2015–16. Fluor and forecast also observed in Africa by 44% to
received two PMC contracts, five contracts and Middle East by
both in Europe, for Heydar Aliyev This part of the report focuses 11% to 32 contracts in FY2017–18
Baku oil refinery modernisation on the contracting activity in (Figure 16).
in Azerbaijan and the Wrexham FY2017–18, highlighting the
adhesives plant expansion in current opportunities. A review of Figure 17 shows the regional
Wales. These contractors have contracting activity data shows spread of FEED contracts that
not received any PMC contracts in that about the same number have been awarded between
FY2016–17. of major contracts (FEED, EPC in FY2017–18. The number of

25
CONTRACTING ACTIVITY

FEED contracts awarded globally 45

dropped from 27 in FY2016–17
to 12 in FY2017–18. Two FEED 40
contracts were awarded in the
US for two developments: South 35
Texas Asset Repositioning (STAR)
Program (Marathon Petroleum 30
Corporation) and Gulf Coast
methanol complex (IGP Methanol). 25
A FEED contract was awarded to
HoneywellUOP on Zarqa Refinery 20
Expansion and Upgrade project
in Jordan. A FEED contract was 15
awarded to Wood on the US$20bn
Crude-Oil-to-Chemicals Complex in 10
Yanbu, Saudi Arabia.
5
As shown in Figure 18, Jacobs
and Wood are the most 0
successful FEED contractors Africa Asia Europe Middle North South
in FY2017–18. Jacobs was East America America
awarded two FEED contracts,
one of which was for the Alberta FEED FY2017–18 PMC FY2017–18 EPC FY2017–18
propane dehydrogenation and
polypropylene plant by Canada
Kuwait Petrochemical Corp. in
Canada. Another FEED contract Figure 16
awarded to Jacobs was for the
Contracting activity by region in FY2017–18.
Kallo propane dehydrogenation
plant by Borealis in Belgium
due to a five-year framework 3
agreement with Borealis in
2014. The framework agreement
2
included studies, engineering,
procurement, construction
management and personnel 1
support services. Following
successful completion of the
feasibility study, Jacobs was 0
awarded a contract to complete
a
A

ium
da

ce

ia
r ia

y
an

n
te
bi

ar

Ira
US

the FEED phase by mid-2018.

es
rd

na
ge

an
ra

ir a

ng
lg

on
Jo

Ca

Fr
iA

Al

Be

Hu
Em

Currently there is no news

Ind
ud

ab
Sa

regarding the extension of the

Ar
d

existing framework agreement

ite
Un

with Borealis, which is expected

to expire in 2019, however, if an
FID is reached, it is highly likely Figure 17
that Jacobs will carry out the EPC
FEED contract awards by country FY2017–18.
scope of the project.

26
In addition to a FEED contract in Figure 19 shows the regional contracts awarded in FY2017–18
Saudi Arabia, Wood successfully spread of EPC contracts that compared with 103 contracts in
secured the FEED contract for have been awarded in FY2017–18. FY2016–17. A total of 128 EPC
Total’s Donges Refinery Upgrade The number of EPC contracts contracts have been awarded
project in France. ThyssenKrupp increased by about 24%, with 128
is carrying out the FEED for
3
construction of a propylene oxide
based polyols plant on behalf
of MOL Group in Tiszaujvaros,
2
Hungary. TechnipFMC is carrying
out the FEED on Hassi Messaoud
– ZCINA – LPG Train Expansion
1
project in ALgeria, awarded
by Sonatrach. FEED contracts
were awarded to Fluor for the
0
South Texas Asset Repositioning

p
OP

&I
Programme (the Galveston Bay
c

pp
ns
bs

pA
MC

ion
Pl

ou
CB
tio
co

tS
ru

ll U
t

Gr
pF
d

ra

refining complex) by Marathon nK

olu
Ja
oo

on
ni

we
po

de
se
ch
W

lS

im
or

L in
Petroleum Corporation and to
ys

ne
Te

ica

cn
C

Th

Ho

Te
or
hn

CB&I for the Gulf Coast Methanol

Flu
ec

e
air
rT

complex by IGP Methanol, both

M
a
St

projects are located in the US.

ne
Lo

SNC-Lavalin is carrying out the

FEED for the Dorogobuzh Ammonia
Plant Expansion and Upgrade Figure 18
project by Acron in Russia.
Successful FEED contractors FY2017–18

25

20

15

10

0
Oman

Japan
Brunei Darussalam
Germany
USA

Brazil
Mexico

New Zealand
England
Egypt

Singapore

France
Czech Republic
Saudi Arabia
Russia

Canada

Nigeria

South Korea
China

Malaysia

Romania
India

Indonesia
Azerbaijan

Bahrain
Peru

Uzbekistan

Pakistan
Iran

Spain
United Arab Emirates
Philippines

Bahamas

Belarus
Vietnam

Turkey
Thailand

Iraq

Finland

Figure 19

EPC contract awards by country FY2017–18.

27
CONTRACTING ACTIVITY

7
6
5
4
3
2
1
0

ica pp
de a s
p

H o d.
o
oo p

W C o r U OP
Re &I

C T ey w f ac

En gin on
ing tion

MC
a x lc

s s em

gin gs
Inc

ex & T p

et .

e r ing
s

In c

ch g
br
ob
ou

ou

ou
P

Lt
as C B

L in n id

Te e rin
En ldin
e m ru

i
ro

r
ta n E orat
ou

pF
ip
Gr

air
n e pora

d
Gr

m Jac

ee
ls
C h e nK

g
: S ars g G

Sa

ell
u

ni
n

e
i
P

p
a;
W
r

L un
Pr
En C o

du SK
ne
an
er

a im n

hy
s

n
ic
ic

gi
Ho
e c or

CI
T

n
cn

Sa

Ro iso
gi

bo
op Flu

&
Te

ry
s
ct

Au
du
JV

ro
n

rP
Si

Ai

Figure 20

Top EPC contractors FY2017–18.

across 101 developments in 39 EPC contractor executing the Kontrol (Malaysia) has been
countries in FY2017–18. The top Channelview propylene oxide and appointed to supply process
five countries that have seen EPC tertiary butyl alcohol plant, the analysis system integration
contracts awarded in FY2017–18 Freeport ethylene production unit services and advanced solutions
are the US (22), Russia (10), China expansion, the Galveston Bay/ for the oil storage facilities that
(8), India (7), Iran (7) and Saudi Texas City refinery expansion and are being built for the project.
Arabia (7). the Oyster Creek monoethylene A JV between China Petroleum
glycol plantprojects in the US. Fluor Pipeline Bureau and CPP
Three of the five EPC contracts won an engineering, procurement Petroleum Engineering will carry
awarded to Fluor were made in and construction management out the engineering, procurement,
downstream developments in the (EPCM) contract for the utilities, construction and commissioning
US: the Channelview propylene offsites and infrastructure for for four 1,750 tonnes butadiene
oxide and tertiary butyl alcohol JG Summit Holding’s Batangas bullet tanks (construction to be
plant by LyondellBassel Industries; Naphtha Cracker Expansion project completed by end 2018); four
the Freeport ethylene production in the Philippines. Fluor booked 2,500 tonnes propylene sphere
unit (LHC-9) expansion by Dow the contract, for an undisclosed tanks (by Q1 2019); and one
Texas Operations; and Galveston amount, in the third quarter of 12,000 tonne double-walled
Bay refinery expansion by 2017. Fluor was awarded an EPCM cryogenic ethylene tank (by Q3
Marathon Petroleum Corporation. contract by PETRONAS for an 2019), as well as to provide the
isononanol plant located within necessary utility systems. CTCI
As shown in figure 20, six EPC the RAPID and the Pengerang Corporation has been contracted
contracts were awarded to Fluor integrated complex development. for Package 28B, which covers
in FY2017–18, who received engineering, procurement,
the six contracts across three An additional three EPC contracts construction and commissioning
countries (four contracts in US were awarded within the RAPID for the Euro 5 Mogas CNHT2,
and one contract each in Malaysia and the Pengerang integrated Isomerization, TAME and Tankage
and the Phillipines). Fluor is the complex development: Yokogawa project.

28
Sinopec Engineering Group In addition to the engineering, Group was selected as the lead
(SEG) was awarded three EPC procurement and supply contract, EPC contractor for Braskem’s
contracts for the Sinochem CB&I is continuing to work closely US$675m La Porte polypropylene
Quanzhou refinery expansion, with LUKOIL to assess a broader plant expansion in the US.
the Sinopec EST refinery plant range of solutions for the project. The company also signed an
and the Zhanjiang refinery and agreement with Wanhua Chemical
petrochemical complex phase Técnicas Reunidas has been Group to expand the supply
1 project, all in China. SEG awarded three lump sum turnkey of gas to phase 2 of Wanhua
has also entered into an EPC contracts by Saudi Aramco for the Chemical’s Yantai operations.
contract with National Iranian Oil EPC of the Haradh and Hawiyah Under the agreement, Linde will
Engineering and Construction Gas Increment programme invest US$127m to build two air
Company in relation to phase II covering the North, South and separation units, complementing
of the US$2.9bn Abadan refinery Satellite gas compression plants the two existing air separation
upgrading project in Iran. in Saudi Arabia. The scope of work units already in place.
includes installing gas compression
CB&I successfully secured two facilities (at North Haradgh, South TechnipFMC in partnership
EPC contracts in the Middle Haradgh and Satellite Haradgh), with Samsung Engineering and
East. The first was a US$100m liquid separation stations and Técnicas Reunidas received
EPC contract for the Sasref – transmission lines to the Haradh a letter notifying them of a
Jubail refinery – Modernisation and Hawiyah gas plants along US$4.2bn EPC contract award for
and Expansion project in Al- with expanding the existing gas the Sitra refinery upgrade awarded
Jubail city, Saudi Arabia. The gathering pipeline network. Bahrain Petroleum Company
contract was awarded following Engineering and procurement (BAPCO). The formal execution of
CB&I’s successful completion services will be carried out from the contract was expected by the
of conceptual design and FEED the contractor’s headquarters end of January, 2018, however
phases of the project. A second in Madrid, Spain. Furthermore, the project is still awating an FID.
Middle East EPC award came SOCAR-KBR, a PMC contractor BAPCO approached a number
in partnership with Samsung of Heydar Aliyev Baku oil refinery of banks to take a loan of over
Engineering, having received a modernisation in Azerbaijn, has US$1bn for the project, with
letter of award to build ADNOC’s selected Técnicas Reunidas as a remaining costs to be covered
Crude Flexibility project with a winner of a EPC contract tender with equity from BAPCO as well as
contract value of US$2.6bn. The for the reconstruction of units dept facilities supported by export
Crude Flexibility project is part and general production facilities. credit agencies (ECAs). Britain’s
of the US$3.1bn Ruwais Refinery Another EPC contract for the UKEF, Italy’s SACE, Spain’s CESCE
Upgrade project in the UAE. project has been awarded to a JV and the Export-Import Bank of
between Tecnimont and KT-Kinetics Korea are planning to provide a
CB&I also landed a Technology, both Maire Tecnimont loan to support the project.
contract from LUKOIL subsidiaries, for the installation
NizhegorodNefteorgSyntez, a of several new grassroot process Duqm Refinery and Petrochemical
subsidiary of JSC LUKOIL, for the units, relevant utilities and a Industries Co has officially
detailed engineering, procurement storage facility. signed main EPC contracts for
and supply of process equipment, the construction of the Duqm
including two proprietary delayed Linde AG was awarded a major Refinery in Oman. The EPC
coking heaters for the Deep contract by Nizhnekamskneftekhim Package 1, valued at US$2.75bn,
Conversion complex in Kstovo, to supply an olefin plant. Linde which involves developing oil
Russia. The units will use Chevron is responsible for licensing, processing facilities was awarded
Lummus Global’s delayed coking design, material procurement to a JV of Daewoo Engineering
technology for the processing of and technical engineering & Construction and Técnicas
2.1MMtpa of refinery residues. consulting for the plant. The Linde Reunidas. The EPC Package-2,

29
CONTRACTING ACTIVITY

4
valued at US$2bn, was awarded
to a 50/50 Petrofac and Samsung
Engineering JV for construction of
3
offsites and utilities. However, the
project is also awaiting an FID, as
soon as it will be approved, the 2
notice to proceed will be issued to
EPC contractors.
1
In contrast PMC contracting
activity decreased by 44% across
the two financial years, with 0
14 PMC contracts awarded in
an

an

ly
a
ia

d
y

Em o

ay
es

te
bi

ar

an
nd
It a

ic
ss

FY2017–18 compared with 25 PMC

Om

rw
st

pin
ra

ir a
ex
ng

la

gl
Ru

kh

No
iA

ilip

er
M

En
Hu

za
contracts the previous financial

th
ud

Ph
Ka

Ne
ab
Sa

year. Three PMC contracts were

Ar
d
ite
awarded in Russia, two of which

Un
were related to development
of ammonia plants: Acron’s Figure 21
Dorogobuzh Ammonia Plant
PMC contract awards by country FY2017–18.
Expansion and Upgrade project
and Metafrax’s Gubakha ammonia
6
and urea plant. Another PMC
contract was awarded on Rosneft’s
5
Nakhodka Far East refinery and
petrochemical complex (phase I 4
and II).
3
The top PMC contractor, Wood
has been awarded with five 2
PMC contracts in FY2017–18
as shown in Figure 22. Wood’s 1
three PMC contracts were for the
downstream projects in Europe: 0
for ISAB S.r.l.’s Priolo Gargallo
p

lin
&I
ion
c

m
s

bs

ou
ou
Pl

on
CB

va
pe
co
t

Refinery Upgrade project in Italy,

Gr
ra
d

Gr

rs

-La
i
Ja
oo

Sa
Pa
po

A
e

C
W

RV
or

Inovyn’s Rafnes Chemical Plant

ley
sa

SN
C

Ca

or
or

Expansion project in Norway and

W
Flu

Zeeland Refinery N.V.’s refinery

expansion in the Netherlands.
Additional two PMC contracts were Figure 22
arded to Wood for the downstream
Successful PMC contractors FY2017–18.
developments in Middle East.
Wood was selected as a PMC
contractor for the Duqm Refinery management services during the Al-Khobar offices and is expected
and Petrochemical Industries Co’s EPC phase for the Yanbu -crude to continue through to the start of
(DRPIC) Duqm refinery in Oman. oil-to-chemicals complex in Saudi operations, currently forecasted
In addition to the FEED contract, Arabia. The contract will be for 2025. Fluor is providing
Wood will be providing project executed from Wood’s Reading and project management services for

30
JG Summit Holding’s Batangas 50
Naphtha Cracker Expansion 45
project in the Philippines. In
40
addition, Fluor was selected as
the PMC contractor for the FEED 35

Number of projects
and EPC phases of MOL’s Polyold 30
project in Hungary.
25

CB&I has received full notice 20

from Kazakhstan Petrochemical 15
Industries to provide project 10
management services for a
PDH unit and a polypropylene 5
plant. The PDH unit uses 0
CB&I’s CATOFIN® propane 2016 2017 2018 2019 2020
dehydrogenation technology,
while the polypropylene plant FID received FID anticipated
uses CB&I’s Novolen® advanced
gas-phase polypropylene
technology. WorleyParsons was Figure 23
appointed as a PMC contractor
FIDs reached and anticipated.
by ADNOC Refining for the Crude
Flexibility project at the Ruwais
Refinery. WorleyParsons will US$170m Orla processing plant guarantee agencies, as well as
oversee the performance of and delaware system expansion commercial banks lending under
the EPC contractor through the (awarded by Crestwood and First their umbrella.
detailed design and procurement Reserve Corp.) and the US$100m
until June 2019. Thereafter, the (estimated) Chocolate Bayou The long delayed Tahrir
WorleyParsons team will transition polyalphaolefin unit (awarded by Petrochemicals projects was
to the Ruwais refinery site to INEOS). expected to reach FID before the
supervise the construction and end of Q4 2017, however, the
commissioning works until the Major projects that have reached financial closure for the project
final delivery of the project in an FID include SOCAR’s US$1.8bn is being held up by delayed
2022. Heydar Aliyev Baku Oil Refinery approvals from the Export–
Modernisation project in Baku, Import Bank of the United States.
Final investment decisions Oman Gas Company’s US$826m According to a source, financial
The number of projects that Salalah LPG extraction plant closure could be now reached by
reached an FID increased in 2017 in Oman, and Inter Pipeline’s mid-2018, but there are no firm
by 20% in comparison to 2016. US$2.7bn Redwater Alberta timelines available. The other
Propane Dehydrogenation (PDH) key organisations involved in
A total of 20 FIDs were taken in and Polypropylene project in addition to the Export–Import
2017, four of which were related Canada. Bank of the United States, are
to petrochemicals projects in the UK Export Finance, Germany’s
US: the US$2.4bn Channelview Several FIDs were delayed in 2017 Euler Hermes, and the Overseas
propylene oxide and tertiary and are now expected in 2018. Private Investment Corporation
butyl alcohol plant (awarded by The debt term sheets for the (OPIC). OPIC has already given final
LyondellBassell), the US$675m funding of the majority of these approval for its participation, with
La Porte polypropylene plant projects are expected to come board approval at various stages
(awarded by Braskem), the from multilateral lenders and for the other agencies.

31
CONTRACTING ACTIVITY

The EPC contractors (Samsung growing its earnings. The global oil
Engineering, TechnipFMC and market is in a better position today
Técnicas Reunidas) for the than it was 12 months ago. The
US$5.5bn Sitra Refinery Upgrade downstream sector has adapted
project received letters of intent to increasing competition and
in December 2017 and were challenging regulations, and coped
IN THE 2017-18 FINANCIAL
expected to formally sign the well with the volatile oil price
contracts in January 2018. US$3- YEAR EPC ACTIVITY environment.
4bn of financing was expected
through export credit agencies,
INCREASED IN ASIA, EUROPE The bulk of projects, 33% of
however, the financial closure is AND NORTH AMERICA all downstream projects in
also being delayed. EICDataStream, were expected to
start-up operations in 2017-2018,
The US$6.1bn Duqm refinery, mainly in Asia (28%) and North
being developed by Duqm Refinery The FEED will provide a budget America (27%), followed by Europe
and Petrochemical Industries Co cost estimate to obtain an FID for (24%). However, an increasing
(DRPIC), a JV between Oman Oil the project in 2018. number of feasibility and FEED
Company and Kuwait Petroleum activities show the need for new
International (KPI), has issued ExxonMobil was nearing final developments to meet growing
letters of conditional intentions for approval of the US$3bn Beaumont global demand.
awarding major EPC contracts to a refinery expansion which will
JV between Petrofac and Samsung include a third crude distillation Global overview
Engineering and a JV between unit in Texas, the US, which has
Técnicas Reunidas and Daewoo been under consideration since Africa
Engineering & Construction in July 2014. A source close to the Algeria is expected to dominate
August 2017. The EPC contracts project has suggested that should the number of contract awards in
were signed in February 2018. the recently proposed 25% tariff on Africa.
Although a notice to proceed to imported steel come into effect,
EPC contractors has not been the decision to take an FID could Historically, major international
issued, the groundbreaking be impacted. The project will take contractors such as ABB, China
ceremony was held on 25 April advantage of the country’s shale National Petroleum Corporation,
2018. The project is undergoing production growth and an FID for China Petroleum Engineering and
fincancing challenges due to the project would demonstrate Construction Company, Daewoo
Oman’s recent downgrade by ExxonMobil’s confidence in US International Corp, Engineers
Moody’s ratings agency, which shale production and global India Ltd, Hanwha Engineering
has made debt more expensive to demand for refined products. & Construction Corp, Hyundai
secure. DRPIC has had to revisit its E&C, Hyundai Engineering Co,
borrowing strategy by approaching Appendix 5 shows the major Itochu Corp Japan Gasoline Corp.,
all banks that have showed projects with FIDs expected in Saipem, Técnicas Reunidas and
willingness to lend to the project 2018 and 2019. Wood have been successful FEED
and it is currently on course and EPC contractors with state-
to borrow 50% of the project’s owned Sonatrach. It should be
CAPEX. Summary noted that if a contractor has been
involved in FEED including PMC
SNC-Lavalin is undertaking a FEED The downstream sector has stages, then it usually cannot bid
conversion to EPC contract for a proven its importance during the for the EPC contract.
10,000 barrels per day (bbl/d) oil oil industry’s downturn, not only
refinery operated by Brahms Oil providing the bulk of major oil and The US$1bn Skikda Refinery
Refineries Ltd in Kamsar, Guinea. gas operators’ profits but also Expansion project is expected

32
to see the award of EPC Although Sonatrach plans to A FEED contract is envisaged to be
contracts for two packages: award several EPC contracts in awarded on Shell’s proposed Cabo
the hydrocracking and naphtha the near future, the company Delgado GTL plant in Mozambique
reforming units. The FEED has put the US$2.8bn Biskra in 2020. Following successful
and PMC contractor, Técnicas refinery on hold due to financial completion of FEED, an FID is
Reunidas, is currently undertaking uncertainties. Nevertheless, newly expected in 2021, construction
the front-end engineering studies. appointed CEO of Sonatrach is estimated to take four years
Amec Foster Wheeler (now part Abdelmoumen Ould Kaddour is with an estimated plant start-up
of Wood) is carrying out the FEED pushing to simplify the taxation in 2025. Cabo Delgado project
contract for several downstream and bureaucracy in order to will benefit from lessons learned
developments including the make Algeria more attractive for from Pearl GTL project. Core
US$2.5bn Hassi Messaoud new investment. technologies (reactors) will be
refinery; Sonatrach has pre- used similar to those used on the
qualified EPC contractors for Two FEED contracts are expected Pearl GTL project. By-product,
the project with the invitation to to be awarded in Egypt for steam produced by GTL, will be
bid for the EPC tender issued the US$5.2bn Gulf of Suez used to produce 80MW electricity.
in November 2017. As of March petrochemical plant and the
2018, the EPC tender exercise US$50m Metoubes formaldehyde In Nigeria, the FEED and EPC
is facing delays, initially the complex. Sidi Kerir Petrochemicals contracts are expected to be
companies had been given three Company (SIDPEC) is looking for awarded to upgrade and expand the
months to submit technical bids, an EPC contractor to execute the country’s ageing refineries such as
however, according to an industry US$1.2bn Alexandria polypropylene the Kaduna, Port Harcourt and Warri
source, it is likely now that the bid plant, for which Honeywell UOP was refineries. International players, ENI
deadline for technical submission selected to provide the propylene and General Electric, are interested
will be extended and an invitation technology and Grace to provide in investing and providing support to
to submit commercial bids is the polypropylene technology. upgrade these refineries.
expected later in 2018. The Licensers are now in the stage of
following companies are currently preparing a short list of EPCs. Full The government of Uganda has
bidding for the EPC phase financial closure for the US$10.6bn entered into a project framework
of the project: GS E&C, JGC Tahrir petrochemicals complex is agreement with the Albertine
Corporation, Maire Tecnimont as targeted for the first half of 2018, Graben Refinery Consortium
well as a consortium of Técnicas which is expected to provide huge for the development of the
Reunidas with Daewoo E&C. opportunities for the UK supply 60,000bbl/d refinery in Hoima,
chain as UKEF is planning to Uganda. The agreement will
The EPC tender for the US$2.8bn support the project financially. lead to the commencement
Tiaret refinery is now anticipated of pre-FID activities and will
in 2019; it will follow the tender proceed thereafter to construct
of Hassi Messaoud refinery. and operate the refinery. Each
According to Sonatrach, a single member of the consortium will
company would be asked to undertake a specific role during
undertake the design work for each stage of the project: YAATRA
all greenfield refineries as they Africa and LionWorks will provide
will all be designed to similar THE NUMBER OF PROJECTS infrastructure solutions, Saipem
specifications. will act as a services provider to
THAT REACHED AN FID
the project investors, and Baker
The EPC contract for the Arzew INCREASED IN 2017 BY 20% Hughes, a GE company, will
methyl tert-butyl ether complex provide a comprehensive portfolio
is expected to be tendered in the
IN COMPARISON TO 2016 of equipment, technical and
second half of 2018. financial services.

33
CONTRACTING ACTIVITY

Asia a stake in the project as Saudi

In Asia, China is expected to Aramco’s strategic partner.
dominate the contracting activity.
All of the new refineries China is Some major FEED contracts
bringing onstream over the next are expected to be awarded
five years will be integrated with for the following projects: the
A DEVELOPMENT AGREEMENT
new crackers. This is because US$6.8bn Pachpadra refinery
while China is already oversupplied FOR THE WORLD’S and petrochemical complex;
in gasoline and diesel, it still has the US$5bn Guru Gobind Singh
major polyolefins deficits.
LARGEST REFINERY AND refinery expansion phase 2 and
PETROCHEMICAL COMPLEX petrochemical complex; the
The FEED contracts are expected US$2.8bn Mangalore refinery
to be awarded for the US$1bn HAS BEEN SIGNED IN INDIA expansion and upgrade; and the
Jinzhou integrated refining and US$3bn Numaligarh refinery
petrochemical complex, the expansion.
US$1.2bn Lianyungang refinery Petrochemical Industrial Park. The
and petrochemical facility, and agreements between ExxonMobil, Financing of Indian projects consists
the US$5bn Tianjin refinery, the Huizhou municipal government of a combination of internal accruals,
petrochemical complex and and the Administrative Committee strategic investment and debt as
storage facility (China National of the Huizhou Dayawan Economic well as monetary support from the
Petroleum Corporation). and Technological Development supreme governing authorities of the
Zone have been signed. Indian states. Governmental support
Contracts are expected to be towards projects also includes
awarded for the Yinchaun methanol In India an estimated US$148bn providing tax incentives. The
to olefin plant, the Lianyungang CAPEX is planned for grassroots International Finance Corporation
petrochemical complex (Zhejiang refineries, refinery expansions, has been providing financial
Satellite Petrochemical). In April petrochemical complexes assistance through a mix of debt and
2018, CB&I has been awarded an and integrated refinery and equity investments in companies
ethylene technology contract for petrochemicals complex projects. directly besides backing other
the Lianyungang petrochemical private equity funds investing in the
complex. The scope of work A development agreement for country. The US$6.8bn Pachpadra
includes a process design the world’s largest refinery and Refinery and Petrochemical Complex
package, heater engineering petrochemical complex, to be project, developed by a consortium
and technology license for two located in Maharashtra, was of Hindustan Petroleum Corp. Ltd
ethylene plants with a capacity signed by a consortium comprising and the Government of Rajasthan,
of 1.25MMtpa each. Contracts of state-owned Indian Oil Corp. will finance 63% of the total cost
are also expected to be awarded Ltd, Bharat Petroleum Corp. through debt and the rest would be
for the Ningxia Coal-to-Chemical Ltd and Hindustan Petroleum funded through equity. The state’s
Plant (Saudi Basic Industries Corp. Ltd, with Saudi Aramco US$583m of funding will receive a
Corporation [SABIC]) projects, who are understood be in 12% return on investment. A JV of
for which construction is planned discussions about the possibility Hindustan Petroleum Corp. Ltd and
to commence next year after of participating in the project. Mittal Energy Investments Pvt Ltd,
receiving all regulatory approvals. According to the Indian oil projects developers of the Guru
minister, construction work at the Gobind Singh Refinery Expansion
The feasibility and FEED contracts US$44bn Maharashtra refinery Phase 2 and Petrochemical Complex
are expected to be awarded and petrochemical complex project, is funding the expansion
for a proposed world-scale should start following successful through a combination of equity and
petrochemical complex to be acquisition of the land in 2019. debt syndication from 12 domestics
located in the Huizhou Dayawan ADNOC is also planning to take banks.

34
While India is actively upgrading the Cilacap Refinery expansion refinery; the US$8bn Nam Van
its refineries to implement the and upgrade projects. As of Phong refinery; and the US$8bn
BS VI (equivalent to Euro VI) July 2017, Saudi Aramco has Long Son refinery projects, but
quality-upgrading programme in re-affirmed its commitment to these are still in the early stages
order to meet the government’s the Cilacap refinery, a JV project of development, with construction
target of BS VI fuel standards development, and in August 2017, not set to start soon.
across the country by 1 April Rosneft agreed to give financial
2020 – the International Marine support of US$270m for the basic Several contracts are expected
Organisation has set a 2020 date engineering design and FEED to be awarded in Uzbekistan,
for ships to comply with even studies for the Tuban refinery and including the FEED contract
lower sulphur fuel oil requirement, petrochemical complex. Pertamina for the Angren Petrochemical
implementing a global sulphur has convinced both companies to project and the EPC contract
limit of 0.50% mass (of sulphur)/ conduct joint marketing efforts, for the US$1bn Shurtan Gas and
mass (of fuel). Following tougher which will ease its financial burden. Chemical Complex Expansion
international regulations on sulphur project.
emissions on shipping fuels, SK An EPC contract award is planned
Energy has announced plans to for the US$5.3bn Balikpapan Europe
spend US$897.8m to build a new Refinery Expansion and Upgrade Europe will also be a source of
desulphurisation unit at its Ulsan project. As of February 2018, the significant contracting activity.
refinery by 2020. FEED work is under final review Major oil and gas operators
process with EPC award expected are investing to strengthen the
FEED contracting activity is by the end of 2018. Pertamina competitiveness of refineries
expected to increase in Indonesia plans to commence construction and petrochemicals plants in the
as national oil company Pertamina in December 2017, complete the region.
is aiming to expand its refining first stage in 2020 and the second
capacity from its current stage by 2022. An EPC contract is expected to
1.04MMbbl/d to 2.3MMbbl/d be awarded to upgrade the Rijeka
by around 2025 via green-field Elsewhere in Asia Pacific, no refinery in Croatia. INA Industrija
projects and expansion at existing contracting activity is expected Nafte DD initiated the official
plants to meet growing domestic to take place in Vietnam. There tendering process for construction
demand. are several projects planned, of Rijeka’s delayed coking plant
including the US$3bn Quang Nam and associated installations in late
Projects being developed to 2017 and the company plans to
meet this target include: the reach an FID on the Rijeka Residue
US$8bn Balongan petrochemical Upgrading project during the first
complex (developed by PTTGC half of 2018. Another EPC contract
& Pertamina); the US$10bn is envisaged to be awarded on
Pertamina Bontang refinery; Total’s US$425m Donges refinery
the US$15bn Tuban refinery upgrade for which the FEED has
and petrochemical complex;
EXXONMOBIL IS STUDYING been completed in October 2017.
and the US$5.5 Cilacap refinery PLANS TO UPGRADE ITS An EPC contract is envisaged to
expansion and upgrade. Although, be awarded on Mongstad Refinery
the projects may be delayed due FAWLEY REFINERY AND Low-sulphur Gasoline project
to financial issues, international CHEMICAL PLANT IN ENGLAND, operated by Statoil in Norway.
players such as Rosneft and Wood is currently carrying out the
Saudi Aramco have signed JV WITH A POSSIBLE INVESTMENT FEED, which includes the design,
agreements with Pertamina to OF US$2BN IN THE PROJECT engineering and analysis for
develop the Tuban refinery and modifications to reduce sulphur
petrochemical complex and content in gasoline produced.

35
CONTRACTING ACTIVITY

Wood will focus on the design to the expansion of the ethylene

upgrade the refinery’s naphtha capacity of its cracker facilities
hydrotreating and storage systems in Grangemouth, Scotland, and in
to meet new fuel specifications on Rafnes, Norway, to over 1m tonnes
the sulphur content. each. The projects are part of
INEOS massive US$2bn investment
BOREALIS IS PLANNING TO
According to industry sources, in Dragon Ships programme,
ExxonMobil is currently studying CONSTRUCT A PROPANE ships so large they required a new
plans to upgrade its Fawley classification, Dragon class and
refinery and chemical plant
DEHYDROGENATION PLANT which allow INEOS to import cheap
in England, with a possible WITH A PRODUCTION ethane and LPG from the US in
investment of about US$2bn in the huge quantities.
project. CAPACITY OF 740,000
TONNES PER ANNUM OF An estimated US$67bn CAPEX
DowDuPont is planning to construct is planned for petrochemical
a world-scale 450,000 tonnes POLYMER-GRADE PROPYLENE complex and refinery
per annum polyolefins facility in PLANT IN KALLO, BELGIUM modernisation projects in Russia.
Europe. This additional capacity Several technology licensor
will maximise the value of Dow’s contracts are expected to be
ethylene integration in the region signed for the US$8.7bn Amur gas
and serve growing demand for completed by October 2018, with chemical complex, with potential
high-performance pressure pipes a decision expected in the fourth licensors including CB&I, KBR,
and fittings, as well as caps and quarter of 2018, a few months Linde, Sinopec and Technip. The
closures applications. The project after an FID is reached on the FEED contract award is planned
is part of a five-year US$4bn propane dehydrogenation unit. by the end of 2018. Sibur now
investment campaign by Dow. plans a FID for the project in
Borealis, INEOS and Zaklady Zaklady Chemisczne Police, a 2020. The FEED work is starting
Chemiczne Police are separately subsidiary of Grupa Azoty, is in 2018. The project developer
planning to build grassroots considering a construction of a is currently in discussions with
propane dehydrogenation plants propane dehydrogenation plant in several international companies
in Europe. Borealis has moved to Police, Poland, with a capacity to including Sinopec about a
the FEED phase for the US$1bn produce 427,000 tonnes per annum potential co-investor role in the
propane dehydrogenation plant in of propylene using Honeywell’s project and believes that this
Kallo, Belgium, awarding the FEED UOP’s Oleflex technology. The FID is project is a good fit for a JV.
contract to Jacobs in January being delayed, however, as soon as The US$25.8bn Nakhodka Far
2018, after successfully concluding this is reached, the EPC contractor East refinery and petrochemical
the feasibility study; the FID will be is expected to be selected. complex is currently in the final
taken in the third quarter of 2018. stage of passing through state
In addition, Borealis is considering INEOS is also studying the expert review committee. A
a series of polypropylene capacity feasibility of developing a propane review of the tenders connected
expansions in Europe if it goes dehydrogenation unit, most likely with the technological equipment
ahead with the plant in Kallo. in Antwerp, Belgium. In addition, is expected in 2018, following
The company is considering three FEED contracts are expected approval of the FID. Tatneft plans
adding 300,000-450,000 tonnes to be awarded by INEOS for the to invest around $3.4bn in Taneco
per annum of capacity through construction of three projects, facilities’ upgrade by 2025. A
debottlenecking operations at its currently at feasibility stages: a feasibility study for Nizhnekamsk
three plants in Belgium. A feasibility vinyl acetate monomer plant with refinery and petrochemical
study is currently being carried an annual production capacity of complex – phase 3 operated by
out by Jacobs and aimed to be 300,000 tonnes in Europe, and Taneco is currently under way.

36
A FEED contract is expected to EPC 6: pipeline for NG and gas is preparing to start the
be awarded following successful reduction station prequalification of bidders for the
completion of the feasibility study, planned Al Zour petrochemical
which is scheduled for completion EPC 7: buildings, laboratory and complex. EPC documents are
in the first half of 2018. control room expected to be released by the
first half of 2018. It is yet unclear if
The Middle East EPC 8: main post KIPIC will decide to tender several
Iran is expected to be a source packages for the US$7bn olefins
of significant contracting activity, EPC 9: power transmission 3 and US$5bn aromatics 2 plants
with an estimated US$72bn spend as separate projects or as a single
planned for petrochemical complex EPC 10: export jetty mega project.
and refinery upgrade projects.
Following successful completion Duqm Refinery and Petrochemical
Chinese, Japanese and South of pre-FEED and FEED by KBR and Industries Co (DRPIC) is
Korean contractors are expected Wood, EPC contracts are planned planning to add an integrated
to win a large number of contracts to be signed for the US$20bn petrochemical complex at under
due to the funds allocated to Yanbu crude oil-to-chemicals development refinery in Duqm,
finance the projects coming from plant, under development by Saudi Oman. Engineering studies for an
these countries. Aramco and SABIC. integrated petrochemical plant are
currently under way and set to be
EPC contracts are expected to Major contracts are envisaged to completed within 12–18 months
be awarded on the Siraf refining be signed on various integrated (mid 2019).
Park, in the Pars Special Energy petrochemical and chemical
Economic Zone, in the city of developments in Kuwait, Oman and Saudi Aramco and Total signed
Assaluyeh, southern Iran. The Saudi Arabia. an MoU to build a US$5bn
refining park will consist of eight petrochemical complex integrated
60,000bbl/d gas condensate Kuwait Integrated Petroleum to SATORP refinery, in Jubail, Saudi
refineries with a total feedstock Industries Company (KIPIC) Arabia. Complex will include a
capacity of 480,000bbl/d along mixed-feed steam cracker with a
with utility facilities, logistics capacity of 1.5MMtpa of ethylene
and processing units. Each and related high-added-value
of the eight refineries will be petrochemical units. The project
developed in parallel with a similar will represent an investment of
infrastructure, which are divided to around US$5bn. The FEED is
10 EPC packages each, as follows: THE TENDER FOR THE planned to commence in the
third quarter of 2018, for which a
EPC 1: HPU, air and nitrogen units MAIN EPC CONTRACT FOR contractor has to be selected.
THE US$20BN YANBU
EPC 2: SWS, ATU, SRU, TGTU Elsewhere in the region, Bahrain
CRUDE OIL-TO-CHEMICALS Petroleum Company is planning
EPC 3: cooling water, plant water, to issue an invitation to bid for the
PLANT IS PLANNED FOR
DM, fire water, waste water EPC contract for the US$1.5bn
treatment 2020. THE MEGAPROJECT aromatics complex being built
at the Sitra refinery. The UAE’s
EPC 4: steam GENERATION UNIT
IS EXPECTED TO BE A ADNOC has recently announced
SOURCE OF SIGNIFICANT plans to invest US$45bn to expand
EPC 5: interconnection and flare its domestic and international
system, feed pipeline, metering CONTRACTING ACTIVITY refining, gas processing and
station, feed tanks & pumps, loading petrochemicals portfolio over the

37
CONTRACTING ACTIVITY

next five years. As part of this begun, and the project is currently carry out engineering and design
strategy, ADNOC will increase being rebranded as ‘the Sunshine work for the planned US$3.2bn
its refining and petrochemical project’. Depending upon regulatory Alberta propane dehydrogenation
operations in Ruwais through approvals, construction activities and polypropylene plant. The FEED
construction of a new grassroots could begin as early as 2019 and on the project is expected to be
facility. In addition, ADNOC and take 10 years to complete. completed in the fourth quarter of
Borealis have signed a framework 2018 and, depending on feasibility
agreement under which the ExxonMobil is strategically of the project, the EPC contractor
companies will advance two key investing in new refining and will be selected.
projects: moving to the Pre-FEED chemical-manufacturing projects
stage for the construction of the in the US Gulf Coast to expand its North America will continue to be
Borouge 4 complex, as well as manufacturing and export capacity the focus of global downstream
commencing EPC tendering for through planned investments of construction activity in the coming
an additional polypropylene plant US$20bn expected to continue years with more international
based on Borealis’ proprietary through at least 2022 to take companies investing in the region
Borstar® technology. advantage of the American shale as projects are being actively
revolution. The company’s Growing developed due to competitive
North America the Gulf initiative consists of 11 feedstock prices.
In North America, the FEED major chemical, refining, lubricant
contract is expected to be and LNG projects at proposed South America
awarded for the US$4bn Badlands new and existing facilities along In South America, a contract is
NGL USA polyethylene plant as the the Texas and Louisiana coasts. expected to be awarded on Três
preliminary engineering package ExxonMobil is considering Lagoas nitrogen fertiliser complex
has been successfully completed. expanding light crude processing in Brazil. Various sources indicate
capacity at its Beaumont refinery that the Russian group Acron has
Another FEED contract is expected with the addition of a third crude acquired the unfinished plant from
to be awarded on the Gulf distillation unit. If the US$3bn Petrobras with a pledge to resume
Coast Petrochemical project by Beaumont refinery expansion construction within 60 days and
LyondellBasell Industries following (installation of a third crude pay all outstanding debts with
approval of the FID in 2018; distillation unit) is approved, suppliers. The acquisition has
a new US$2bn petrochemical construction could begin in 2019 yet to be made public by either
project, to be located somewhere and be completed in 2022. The Petrobras or Acron. Completion of
along the Gulf Coast, will use EPC works are planned to be the complex is expected in 2022.
propane as feedstock to produce carried out by Chiyoda Kiewit
polypropylene. JV and CTCI McDermott JVfor The Bolivian government has
the US$7.3bn Gulf Coast Growth announced that a detailed
The EPC contract is expected Ventures’ San Patricio PetChem engineering tender for US$2.2bn
to be awarded on the US$4.5bn facility, where ExxonMobil Gran Chaco propylene and
Belmont County Ethane Cracker partnered with SABIC to construct polypropylene plant will be launched
project by PTT Global Chemical a 1.8MMtpa ethane cracker. The in August 2018. This phase, which
and Daelim Industrial Co. companies have selected San is expected to take eight to nine
depending on approval of the FID Patricio County, in south-east months, will be followed by a tender
by early 2018. Texas for the site and plan to make for the construction contract.
a decision on an investment in the
Formosa Plastics is planning project by the end of 2018. The overall activity in South
to construct a US$9.4bn America is expected to be low
petrochemical complex in St Elsewhere in the region, Jacobs unless new international investors
James Parish, Louisiana. The Engineering has been awarded (American, British, Chinese and
early permitting process has a contract in November 2017 to Russian) enter the market.

38
 MARKET FOCUS: GULF
COOPERATION COUNCIL STATES
MARKET FOCUS: GCC

There has been a renewed drive

towards expanding refining capacity 0.1 (0.006%)
Bahrain*
in Gulf Cooperation Council (GCC) 5.8 (0.1%)
countries by maximising value from
every barrel of crude oil to meet
global energy demand. Investment 101.5 (5.9%)
Kuwait
in refining and petrochemicals has 63.0 (1.0%)
always been viewed as a positive
step into diversification and
5.4 (0.3%)
downstream integration into the full Oman
value chain. The domestic demand 24.9 (0.4%)
in the GCC region has sharply
increased in recent decades and 25.2 (1.5%)
outstripped the refining capacity of Qatar
858.1 (13.0%)
certain petroleum products such as
gasoline and diesel.
Saudi 266.5 (15.6%)
A move in strategy towards Arabia 297.6 (4.5%)
integrating refineries with
petrochemical plants is being
made. Some GGC countries have United Arab 97.8 (5.7%)
been shifting the feedstock mix Emirates 215.1 (3.3%)
away from ethane towards refined
products such as naphtha, butane
and propane. Crude oil (Bbbl) Natural gas (Tcf)

In addition, there are other

technical drivers in force such as
maximising the yield of high-value Figure 24
products, producing cleaner fuels
Distribution of oil and gas reserves (2016).
with low sulphur content, meeting
Source: BP Statistical Review of World Energy 2017.
more stringent environmental *Due to insufficient data, Bahrain’s proven crude oil reserve is based on Index
regulations and reconfiguring Mundi, January 2016.
refineries to changing patterns in
petroleum product demand. clean fuels with low sulphur with new petrochemicals
content, providing a competitive plants to take advantage of
Multi-billion-dollar investments edge in a tough market – an competitive feedstocks
are planned to upgrade and advantage when it comes
expand the GCC countries’ current to exporting clean refined • New chemical/petrochemical
facilities as well as constructing products, especially to Europe’s projects to take advantage
new grassroots refineries and heavily regulated environment of competitive feedstocks
petrochemicals facilities. and grow revenues from
• New refinery projects to exporting high value-added,
This section of the report focuses produce high-value products more specialised products
on major project activities in the to meet domestic and
GCC countries including: international demand for rising The UAE’s ADNOC has projected
products such as diesel, that demand from Asia for
• Upgrade and expansion projects gasoline and jet fuel. Refineries petrochemicals and plastics will
to produce high volume of are also being integrated continue to increase, doubling

40
 14 50.0
45.0
12
40.0
Crude oil (Mmbbl/d)

10

Natural gas (Bcf/d)

35.0
30.0
8
25.0
6
20.0

4 15.0
10.0
2
5.0
0 -
Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Other Middle
Emirates East

Crude oil: production Crude oil: consumption Natural gas production Natural gas consumption

Figure 25

Oil and gas production and consumption.

Source: BP Statistical Review of World Energy 2017.

from current levels by 2040. revenues. According to BP’s reserves. As of the end of 2016,
According to Platts Analytics Statistical Review of World Energy Qatar’s proven gas reserves were
(2016), around 12m tonnes of 2017, Saudi Arabia holds the estimated as 858.1tn cubic feet
additional polyethylene supply world’s second largest proven oil (Tcf), which is 13% of the world’s
will be needed between 2024 reserves, estimated at 266.5bn total estimated 6,588.8Tcf,
and 2025. A polyethylene barrels, which is 15.6% of the followed by Saudi Arabia
and polypropylene deficit is world’s total proven oil reserves. (297.6Tcf), the UAE (215.1Tcf),
forecast in Asia Pacific, Africa In the GCC, Kuwait and the UAE Kuwait (63Tcf), Oman (24.9Tcf) and
and South America by 2026. follow Saudi Arabia, with estimated Bahrain (5.8Tcf). Figure 24 shows
The GCC countries are pursuing proven oil reserves of 101.5bn the distribution of the GCC states’
downstream expansions to meet and 97.8bn barrels, respectively. proven oil and gas reserves with
demand from these regions. Significantly lower proven oil respect to world’s total reserves
reserves are found in Qatar and based on BP’s Statistical Review of
Oman, with 1.5% and 0.3% of the World Energy 2017.
Overview: setting world’s total proved oil reserves,
the scene respectively (1,706.7bn barrels Oil and gas: production and
collectively). Bahrain has the consumption
The GCC is formed by six Middle lowest proven oil reserves in the
Eastern countries: Bahrain, Kuwait, region, estimated at 100m barrels The highest oil producer among
Oman, Qatar, Saudi Arabia and the as at January 2016. the GCC nations, Saudi Arabia
UAE. is also the largest oil-consumer.
Although Saudi Arabia has the According to the BP Statistical
GCC countries heavily depend highest proven oil reserves in Review of World Energy 2017, out
on oil and gas as the main the GCC, Qatar leads the region of an estimated 12.35MMbbl/d of
source of export and economic with the highest proven gas oil produced in Saudi Arabia about

41
MARKET FOCUS: GCC

32% (3.9MMbbl/d) was consumed annum LNG receiving terminal in

domestically by power generation the Hidd industrial area by 2019.
and transportation industries.
Downstream related activities
Saudi Arabia, the UAE and Kuwait of major GCC players abroad
are major crude oil exporters,
THE HIGHEST OIL PRODUCER
particularly to Asian markets. Major national GCC oil companies
The UAE consumed 24% of AMONG THE GCC NATIONS, are increasing their global
4.1MMbbl/d total oil produced; presence in the key downstream
Kuwait consumed about 15% of
SAUDI ARABIA IS ALSO THE markets. These firms are taking
3.15MMbbl/d total oil produced. LARGEST OIL-CONSUMER shares to develop international
About 18% of Qatar’s oil was refineries and petrochemical
consumed domestically, leaving facilities in a bid to diversify state
1.56MMbbl/d as net export. The assets and meet growing demand
region’s smallest oil producer, Saudi Arabia and the UAE are for refined and petrochemical
Bahrain, imports crude oil from heavily focused on advancing products in key regions as well
Saudi Arabia via a pipeline, technologies to develop their vast as to secure long-term access to
which is processed at Bahrain’s gas reserves to meet growing gas export their own crude oil.
267,000bbl/d refinery at Sitra. demand not only for power plants
but also for under development For instance, Saudi Arabia’s
The region’s largest natural petrochemical plants. state-owned Saudi Aramco has
gas exporter, Qatar produced taken shares in developments
over 17.5bn cubic feet per day Kuwait also heavily relies on of the Cilacap refinery in
(Bcf/d) of natural gas in 2016 natural gas imports, the majority Indonesia, the Panjin refinery
and consumed only about 23% of which is imported as LNG from and petrochemicals complex
domestically. The majority of Qatar and also from Nigeria, in China and the Pengerang
Qatar’s natural gas is exported as Oman, Trinidad and Yemen. refinery and petrochemical
LNG to Asian markets. Qatar also According to the BP Statistical integrated development in
exports natural gas to the UAE Review of World Energy 2017, in Malaysia. Saudi Aramco is also
and Oman through the Dolphin gas 2016 Kuwait consumed 2.1Bcf/d in discussions with India about
pipeline. of natural gas, 28% higher than the possibility of participating in
domestic gas production. two refining projects including
Saudi Arabia does not import the 60MMtpa West Coast refinery
or export natural gas; about Oman produced 3.4Bcf/d of in Maharashtra, along with the
10.6Bcf/d of natural gas was natural gas in 2016, of which 70% 9MMtpa Maharashtra refinery. The
produced in Saudi Arabia, all of was consumed domestically and company also has a 25% share in
which was consumed domestically the remaining was exported as China’s Fujan refinery and is a main
by power generation and water LNG to Japan and South Korea. shareholder in South Korea’s S-OIL
desalination plants; the Kingdom with its acquisition of a stake from
has to increase production of As with oil, Bahrain is also a minor Hanjin Group in 2015.
natural gas has to meet growing producer of natural gas, all of
domestic demand. which is consumed domestically SABIC has partnered with
by power (50%) and industrial ExxonMobil to develop a US$7.3bn
The UAE’s natural gas production plants (33%); according to the ethane cracker and derivatives
does not meet the internal demand BP Statistical Review of World complex in San Patricio county,
of 7.4Bcf/d, which is 24% more Energy 2016, Bahrain produced Texas, US. In addition, the
than domestic production, making 1.49Bcf/d. To meet domestic company, in a 50:50 JV with
natural gas imports from Qatar a growing gas demand, Bahrain Shenhua Ningxia Coal Industry is
necessity. plans to construct a 145Bcf per planning to construct a US$3bn

42
coal-to-chemicals plant at Yinchuan 80
in the Ningxia region, China. In

Est. CAPEX (US$ bn)

order to continue growing its
60
global presence, SABIC has signed
an MoU with the United Chemical
Co. in July 2017 to develop 40
a petrochemicals complex in
Kazakhstan. 20

Kuwait’s Al Arfaj Group plans to

0
build a 600,000bbl/d oil refinery in
Bahrain Kuwait Oman Qatar Saudi United
the Indian coastal state of Andhra Arabia Arab
Canada Kuwait Petrochemical Emirates
Corporation Pradesh. Kuwait
Petroleum International has taken Upgrade Refinery and petrochemical complex
a stake in Nghi Son refinery and Refinery Petrochemical complex
petrochemical complex in Vietnam; Expansion Chemical
Kuwait will supply all heavy crude
oil (designed API gravity: 30.2)
for onward processing into end Figure 26
products. Kuwait Petroleum
Estimated CAPEX of active and future projects by major project types (2018–25).
Corporation will supply 100% of
Source: EICDataStream.
the crude to China’s Zhanjiang
refinery and petrochemical
complex, which is being developed Oil Corporation are planning to is aiming to focus its business
along with Sinopec in a 50:50 develop a petrochemical complex on high-value downstream
JV. Petrochemical Industries in Yangpu Economic Development products, ADNOC is looking to
Company, a subsidiary of Zone, Hainan province, China. The develop strategic partnerships
Kuwait Petroleum Corporation plant is planned to consume 3.8m with Japanese petrochemical
is developing a US$3.2bn tonnes of liquefied petroleum gas companies. New projects with
propane dehydrogenation and (LPG) supplied by Qatar Petroleum ADNOC’s involvement in Japan’s
polypropylene plant in Alberta, to produce products including petrochemicals sector are
Canada in a JV with Pembina polypropylene. expected to be announced in the
Pipeline Corporation. near future.
The UAE’s Mubadala Investment
Oman Oil Company, in a JV with Company as well as Abu Dhabi Future spend on refinery
Bharat Petroleum Corp (called Petroleum Investment have taken and petrochemical related
Bharat Oman Refineries Ltd), will the shares in the Gadani refinery projects
operate a 6MMtpa refinery in Bina, and petrochemical complex (aka
India. The company has launched the Khalifa Point Coastal refinery) EICDataStream is currently
a project for a low cost de- in Pakistan, which is being tracking a total of 54 downstream
bottlenecking of its existing facilities developed to process crude oil projects under development or
to enhance its current capacity from UAE. proposed (excluding projects on
to 7.8MMtpa, and potentially to hold) in the GCC countries with
15MMtpa as well as adding a ADNOC is planning to invest about a combined estimated CAPEX
1.5MMtpa naphtha cracker. US$45bn to expand the company’s of US$164bn (Figure 26). About
domestic and international US$40.4bn is to upgrade and
Qatar Petroleum International downstream business in the expand the GCC countries’
and China National Offshore next five years. As the company current facilities, approximately

43
MARKET FOCUS: GCC

US$122bn is to construct 4,000,000

new grassroots refineries and
3,500,000
petrochemicals facilities, and
about US$2.6bn is to construct 3,000,000

Refining capacity (b/d)

chemical plants in Saudi Arabia,
2,500,000
Oman and the UAE.
2,000,000
The next section of the report
1,500,000
will be focused on region’s
downstream outlook, including 1,000,000
supply – demand of refining
500,000
products as well as upgrade,
expansion and new build facilities 0
currently in development phase. Bahrain Kuwait Oman Qatar Saudi UA E
Arabia

Refining capacity in 2017 (b/d) Refining capacity 2018−25 (b/d)

Supply-demand:
refinery expansions
and product export
Figure 27
The GCC nations are expanding
Current and estimated future refining capacity (2017–25).
refining capacities by upgrading
current or building new refining
facilities to increase the 2017 refining capacity (bbl/d) 2018–2025 additions (bbl/d)
production capacity of high-value Bahrain 267,000 +93,000
products such as gasoline, diesel, Kuwait 736,000 +679,000
jet fuels and petrochemicals to Oman 222,000 +312,000
meet domestic demand. Qatar 669,000 0
Saudi Arabia 2,887,000 +840,000
Internal use of diesel and gasoline
has been growing progressively UAE 1,136,500 +310,000
due to population increase,
GDP growth and low fuel prices.
The development of refining Table 4
capacity expansion projects
Current and estimated future refining capacity (2017–25).
is also focused on helping the
GCC nations to export high-value
products, diversify from crude oil
export as well as benefiting from under 6Bbbl/d. Newer and cleaner refinery and expansion of the
strong gross refinery margins refining capacity of 2.16Bbbl/d is Sohar refinery.
and high margins on high-value expected to be added in the region
products during low crude oil between 2018 and 2025, a 35% Kuwait is nearly doubling its
price. Refineries are also being increase from the current capacity. current capacity, with the
integrated with petrochemical 615,000bbl/d Al Zour refinery
complexes to maximise high-value The highest percentage growth currently under development.
products. in refining capacity is planned in
Oman, which is expected to see a The largest capacity addition
At the end of 2017, the region’s 140% increase with construction is expected in Saudi Arabia,
total refining capacity was just of the new grassroots Duqm which is planning to add about

44
840,000bbl/d of refining capacity
by 2025.

Bahrain

Bahrain’s one refinery, built in

1936 and located in Sitra, is one of
the oldest refineries in the region.
About 17% of crude oil feedstock
is pumped from Bahrain’s Awali
field and the remainder is imported
via a pipeline from Saudi Arabia.
The refinery, fully owned by the
country’s national oil company,
Bahrain Petroleum Company,
produces LPG, naphtha, gasoline, 1. Al Zour Refinery (Kuwait)
kerosene, aviation fuel, ultra- 2. Duqm Refinery (Oman)
low sulphur diesel, heavy lube 3. Jizan (Jazan) Refinery (Saudi Arabia)
distillate, fuel oil and asphalt. 4. Fujairah Refinery (UAE)
5. Fujairah Bitumen Refinery (UAE)
Bahrain has expanded its refining
6. Yanbu Oil-to-Chemicals (Saudi Arabia)
facility by adding a 400,000 tonnes
per annum lubricating oil plant in 7. Sitra Refinery (Bahrain)
2011. The lubricating oil plant, a 8. Mina Al-Ahmadi and Mina Abdulla Refineries (Kuwait)
pioneer plant in the region, was 9. Sohar Refinery (Oman) [Commissioning of expansion has been completed
constructed to produce premium and full operational capacity is due to be reached before the end of Q1
quality Very High Viscosity 2018]
Index Group III base oils for use 10. Jebel Ali Refinery (UAE)
in blending top-tier lubricants. 11. Ruwais Refinery (UAE)
Finland-based Neste holds a 45% 12. Jubail -SATORP Refinery (Saudi Arabia)
share and is responsible for sales 13. Jubail -SASREF Refinery (Saudi Arabia)
and marketing of products from
14. Ras Tanura Refinery (Saudi Arabia)
the lubricating oil plant, while
the remaining 55% is owned 15. Petro-Rabigh Refinery (Saudi Arabia)
by Bahrain’s Oil & Gas Holding 16. Yanbu-YASREF Refinery (Saudi Arabia)
Company. It was agreed by the JV
that from January 2018, it would
also start selling some Group III Figure 28
base oils under its own brand.
Refineries: expansions, upgrade and new builds.

In May 2016, Bahrain Petroleum

Company formed a JV with British trades gasoline for the import and exported 95% of the refinery’s
oil storage and blending company export markets. total output to India, the Middle
Greenergy to meet Bahrain’s East, the far east, South East
domestic gasoline demand. The Based on the Joint Organisations Asian and Africa. Bahrain does not
JV, Bahrain Gasoline Blending Data Initiative Oil (JODI-Oil) World import any refined products.
W.L.L, uses components produced Database, in October 2017, the
by Bahrain Petroleum Company’s Sitra refinery produced 1,118,000 Bahrain Petroleum Company is
refining operations, blends and tonnes of refined products and currently undergoing a US$5.5bn

45
MARKET FOCUS: GCC

capacity expansion at the Sitra Mina Al-Ahmadi and Mina Abdullah and countries in 2016: Africa
refinery to increase the refinery’s refineries are being integrated and (3.04MMtpa); Japan (2.87MMtpa);
capabilities for bottom-of-the- upgraded under the US$16bn CFP Europe (2.26MMtpa); Singapore
barrel processing as well as to expand capacities of higher- (2MMtpa); China (1.40MMtpa);
improve overall energy efficiency quality refined products, especially the Middle East (1.08MMtpa);
and increase the output of diesel and gasoline to the global India (0.93MMtpa); South and
cleaner products that meet market. The CFP at Mina Al-Ahmadi Central America (0.64MMtpa);
stricter environmental standards. and Mina Abdullah refineries, the US (0.03MMtpa); Australasia
The refining capacity will be scheduled for completion in 2019, (0.01MMtpa); Other Asia Pacific
increased from 267,000bbl/d to will increase total refining capacity (10.71MMtpa).
360,000bbl/d. The expansion is by about 64,000bbl/d .
scheduled for completion by 2022. The demand for motor and
Based on the JODI-Oil database, aviation gasoline and other oil
Kuwait in October 2017, Kuwait produced products is higher than Kuwait’s
3,726,000 tonnes of refined refining output, therefore Kuwait
At the beginning of 2017 products and exported 73% of is investing to increase refining
Kuwait had three refineries: the the overall refinery output, mainly capacity not only for export, but
466,000bbl/d Mina Al-Ahmadi LPG, naphtha, kerosene, gas/ also to meet its domestic demand.
refinery, the 270,000bbl/d diesel oil, fuel oil and some motor
Mina Abdullah refinery and the and aviation fuel and other oil Kuwait’s refining capacity
200,000bbl/d Shuaiba refinery. products. is expected to increase by
However, in March 2017, Kuwait 615,000bbl/d in 2020, through
closed the Shuaiba refinery as According to the BP Statistical the construction of the Al Zour
studies conducted showed that Review of World Energy 2017, refinery which is being developed
upgrading the ageing refinery Kuwait exported 24.98m tonnes of by Kuwait Integrated Petroleum
was uneconomical. Currently the products to the following regions Industries Company, a subsidiary

Refinery Operator 2017 refining capacity 2018–22 additions To be Notes

(bbl/d) (bbl/d) completed by
Sitra refinery BAPCO 267,000 93,000 2022 Upgrade and expansion

Table 5

Bahrain’s refining capacity.

Refinery Operator 2017 refining 2018–20 To be Notes

capacity (bbl/d) additions (bbl/d) completed by
Mina Abdulla refinery KNPC 270,000 64,000 2019 Clean Fuels project
Mina Al-Ahmadi refinery KNPC 466,000 2019 Clean Fuels project
Al Zour refinery KNPC - 615,000 2020 New build
Total capacity 736,000 679,000

Table 6

Kuwait’s refining capacity.

46
of Kuwait Petroleum Corporation,
at a cost of US$15.5bn. The
KEY UNITS UNDER CONSTRUCTION AT THE GRASSROOTS
development will include a
AL ZOUR REFINERY
24,000bbl/d Honeywell UOP
Selectfining™ unit to produce low- • Three crude distillation units to receive power from the Al
sulphur gasoline. The new refinery (technology licensor: Fluor) Zour South power station
will produce jet fuel, kerosene • Three atmospheric residue • Other installations include
and naphtha feedstock for desulphurisation units flares, sulphur pelletising and
petrochemical plants and supply (technology licensor: Chevron sulphur conveying systems
225,000bbl/d of low-sulphur fuel Lummus Global) • Pipelines (feedstock and
oil to local power plants. • Three diesel hydrotreating products supply)
units (technology licensor: • Other constructions include
Oman Shell Global Solutions) various channels, a basin for
• Two naphtha hydrotreating a future jetty, a barge dock,
Currently Omani crude is units (technology licensor: roads and storage tanks
processed at the Mina Al Fahal Haldor Topsoe)
and Sohar refineries into naphtha, • Two kero hydrotreating units MAJOR CONTRACTORS
LPG, gas/diesel oil gasoline, fuel (technology licensor: Haldor INVOLVED IN THE PROJECT
oil and jet fuel. Together, the Topsoe)
two refineries have a processing • Two saturated gas processing PMC: Amec Foster Wheeler –
capacity of 222,000 bbl/d . plants now part of Wood (US$528m)
• A heavy oil-cooling unit
Based on the JODI-Oil database, • A hydrogen recovery unit EPC: the FDH JV company
in February 2016, Oman (technology licensor: Fluor) between Fluor, Daewoo
produced 987,000 tonnes of • A hydrogen compression unit Engineering and Construction,
refined products and exported • Four trains of hydrogen and Hyundai Heavy Industries,
only 14.3% of the refinery’s production units (technology to develop key process units,
total output, mainly, gas/diesel licensor: Haldor Topsoe) utilities and infrastructure
and fuel oil. About 64% of total • A sour water stripper unit
refining products was consumed (technology licensor: Fluor) Engineering, supply,
domestically. • Three amine regeneration construction and commissioning
plants (technology licensor: of the processing units:
Fuel consumption has grown Fluor) Técnicas Reunidas
by 10% annually over the past • Three sulphur recovery units
five years in Oman. State- (technology licensor: Shell The EPC contractors
owned Oman Refineries and Global Solutions) will develop a detailed
Petrochemical Industries Company • Tail gas-treating units engineering design of the
is commissioning the US$2.1bn (technology licensor: Shell plant using technologies
Sohar Refinery Improvement Global Solutions) from the technology licensing
project, which will increase the • Utilities: Main control system contractors above and then
capacity of the Sohar refinery from is an Experion PKS integrated use various sub-contractors
116,400bbl/d to 198,000bbl/d control and safety system, to manufacture and fabricate
before the end of Q1 2018. A Honeywell UOP the units to be installed
crude distillation unit, a vacuum • A steam generating unit, air at the refinery. The EPC
distillation unit, a delayed coker systems, water treatment contractors are also involved in
unit, a hydrocracker unit and a systems, a cooling water unit development of infrastructure
bitumen blowing unit have been and high voltage substations and commissioning of the
added to the refinery. These new refinery.
units will increase the current

47
MARKET FOCUS: GCC

Refinery Operator 2017 refining 2018–23 To be Notes

capacity (bbl/d) additions (bbl/d) completed by
Mina Al Fahal refinery ORPIC 106,000 –
Sohar refinery ORPIC 116,000 82,000 2018 Upgrade and expansion has
been completed and full
operational capacity is due to
be reached before the end of
Q1 2018
Duqm refinery DRPIC – 230,000 2023 New build
Total capacity 222,000 312,000

Table 7

Oman’s refining capacity.

production of fuels, naphtha and a new JV – the Duqm Refinery and In August 2017, the JV issued
propylene by 70%. The plant will Petrochemical Industries Company letters of conditional intentions
also start producing bitumen for – has been formed. for awarding major EPC contracts
the first time in Oman. to a JV consisting of Daewoo
After completion in 2023, the Engineering & Construction and
In addition, Oman Oil Company US$6.1bn Duqm refinery will serve Técnicas Reunidas for the main
has signed an MoU with Kuwait local and international markets by process units and a JV comprising
Petroleum International to processing 230,000bbl/d of crude Petrofac and Samsung Engineering
cooperate in the development oil, 70% of which will be supplied for offsite and utilities. Wood is the
of the Duqm refinery and by Kuwait and the remainder by PMC contractor for the project.
petrochemical complex for which Oman. The UK’s export credit agency,
UK Export Finance (UKEF), plans
to open a line of credit to support
UK companies working on the
GOOD AND SERVICES REQUIRED ON THE DUQM REFINERY PROJECT Duqm refinery and petrochemical
Rotary: coke reclaimer system complex and boost British export.

Electrical: cable trays, conduit pipes and fittings, earthing material, Qatar
electrical LV power cables and lighting cables, electrical MV/HV power
cables, junction boxes and distribution boards, lighting poles and Qatar has two operational
fixtures, remote control panels, solar power system, termination kits refineries – the QP and Ras
Laffan refineries – that process
Instruments and equipment: analysers, instrument single and multi- crude oil and condensate into
cables, laboratory equipment, side entry mixers, nozzles, sprayers, various finished products to meet
Telecoms, telecommunication equipment such as CCTV, PAGA and domestic demand and for export.
telephones The main finished products are
LPG, naphtha, gasoline, jet fuel,
Piping: piping bolts and nuts, piping fittings – mainly CS, piping flanges diesel, marine fuel oil, decant oil
– mainly CS and straight run fuel oil.

Services: third party services such as engineering, logistics and Qatar expanded capacity at its Ras
construction Laffan refinery to 292,000bbl/d
from 146,000bbl/d in December

48
 Refinery Operator 2017 refining 2018–23 Notes
capacity (bbl/d) additions (bbl/d)
QP refinery Qatar Petroleum Refinery 137,000 -
Ras Laffan refinery Qatargas/Total/Cosmo Oil Co/ 292,000 - Doubled refining
Idemitsu Oil & Gas/Mitsui & Co/ capacity in December
Marubeni Corp. 2016
ORYX GTL Qatar Petroleum/Sasol 100,000 - SNC Lavalin - 5 year
EPCM term contract
2016-2021
Pearl GTL Shell/Qatar Petroleum 140,000 - Several EPCM term
contracts awarded
Total capacity 669,000 0

Table 8

Qatar’s refining capacity.

2016, to produce 60,000bbl/d five-year contract in 2014 with the Based on the BP Statistical
of naphtha, 53,000bbl/d of jet option to be extended by one year. Review of World Energy 2017,
fuel, 24,000bbl/d of gasoil and Cape will provide the plant with Saudi Arabia exported 48.41m
9,000bbl/d of LPG. The refinery scaffolding, painting, insulation, tonnes of refined products to
was expanded to ensure efficient and refractory services. A five- following regions and countries in
energy supply inside the country year (2016-21) term contract was 2016: Europe (12.61MMtpa), India
and meet stringent environmental awarded to WorleyParsons to (7.70MMtpa); Africa (6.42MMtpa);
regulations. provide EPCM services primarily Singapore (5.08MMtpa), Japan
for a portfolio of brownfield (2.32MMtpa), China (2.16MMtpa);
Qatar also has two gas to liquid projects to be executed by Middle East (1.27MMtpa); South
(GTL) plants (the ORYX and Pearl WorleyParsons Qatar with support and Central America (0.52MMtpa);
GTL facilities) that process readily from WorleyParsons Global US (0.35MMtpa); Australasia
available natural gas as feedstock Delivery Centre in India. (0.04MMtpa); Other Asia Pacific
to produce LPG, naphtha and (9.94MMtpa).
diesel. Qatar Petroleum developed Saudi Arabia
both GTL plants in conjunction Recently, Saudi Aramco Base Oil
with international players, Sasol Saudi Arabia is the biggest refining Company (Luberef) expanded the
and Shell. Shell’s Pearl GTL plant centre in the region with nine Yanbu refinery facility to include a
is the world largest GTL plant refineries and a total capacity of 23,000bbl/d lube oil hydrocracker
processing 1.6Bcf/d of rich sour about 2.9MMbbl/d. Four of the and ISO-dewaxing complex, which
gas to produce 140,000bbl/d refineries are owned by Saudi will allow additional varieties of
of associated condensate and Aramco, while the remaining five lube oil (Group II base oils) to be
LPG. The plant also produces are co-owned by Saudi Aramco and produced, thereby doubling its
1.38MMtpa of Group III base oils. international companies (Table 9). overall production of base oils to
about 1.2MMtpa.
Although Qatar is currently not These refineries process Saudi
expanding any of its refining Arabian crude oil to produce According to the JODI-Oil
capacities, several EPCM service transportation fuels, as well as database, in October 2017, Saudi
contracts have been awarded for high-value refined products for Arabia produced 12,154,000
the Pearl GTL plant and associated both domestic and international tonnes of refined products and
facilities. Cape was awarded a markets. exported 54% of refineries’

49
MARKET FOCUS: GCC

Refinery Operator 2017 refining 2018–25 To be Notes

capacity (bbl/d) additions (bbl/d) completed by
Jeddah Saudi Aramco 77,000 - 2020 Decommissioning of the 50-year
refinery old refinery to convert into a
distribution centre
Jubail -SATORP Saudi 400,000 40,000 2018 Expansion and addition a
refinery Aramco/Total 1MMtpa petrochemical complex
Jubail -SASREF Saudi 305,000 - 2019 Modernisation
refinery Aramco/Shell
Petro-Rabigh Saudi Aramco/ 400,000 - 2019–24 Clean Fuels project and cracker
refinery Sumitomo expansion
Ras Tanura Saudi Aramco 550,000 - 2020 Clean Fuels project
refinery
Riyadh refinery Saudi Aramco 120,000 - Upgraded in 2017 to reduce the
sulphur content in gasoline and
diesel to 10ppm
Yanbu refinery Saudi Aramco 235,000 -
Yanbu- Saudi Aramco/ 400,000 - Upgraded in December 2014
SAMREF ExxonMobil to reduce sulphur content in
refinery gasoline to 10ppm
Yanbu – Saudi 400,000 - 2019 Clean Fuels projects
YASREF Aramco/China
refinery Petrochemical
Corporation
(Sinopec)
Jizan (Jazan) Saudi Aramco - 400,000 2019 New build
refinery
Yanbu oil-to- Saudi Aramco/ - 400,000 2025 New build
chemicals SABIC
Total capacity 2,887,000 840,000

Table 9

Saudi Arabia’s refining capacity.

total output. As shown in Figure on EICDataStream) is being Saudi Aramco and SABIC are
29, the demand for motor and constructed with a processing considering developing an
aviation gasoline, fuel and other capacity of 400,000bbl/d of oil-to-chemicals project, which
oil is higher than refinery output, heavy and sweet crudes. The will include a 400,000bbl/d
thus Saudi Arabia has imported Jizan refinery is expected to come integrated crude distillation
653,000 tonnes of motor and online in 2019 and output from the and vacuum unit, a distillate
aviation gasoline, 209,000 tonnes refinery, two grades of petrol, fuel hydrotreater, a vacuum gas oil
of gas/diesel oil, 1,021,000 tonnes oil, LPG and bitumen will either be hydrocracker, a residual fluid
of fuel oil and 59,000 tonnes of sold on the domestic market or catalytic cracking unit, a mixed
other oil. exported to markets in Asia and feed and other aromatics units.
Europe. Total and Saudi Aramco Estimated to cost over US$20bn,
A grassroots US$9bn refinery have expanded the capacity at their an FID is expected by 2020
in Jizan (listed as Jizan (Jazan) JV SATORP-Jubail refinery by more with commissioning planned for
Grassroots Export Refinery than 10% to 440,000bbl/d in 2018. 2025.

50
 6,000

5,000
Thousand metric tonnes (kmt)

4,000

3,000

2,000

1,000

0
Oct 17 Oct 17 Oct 17 Oct 17

Refinery output Imports Exports Demand

Saudi Arabia

Liquified petroleum gases Naphtha Motor and aviation gasoline Kerosenes

Gas/diesel oil Fuel oil Other oil products

Figure 29

Saudi Arabia’s refining products in October 2017.

Source: Joint Organisations Data Initiative.

In November 2017, Saudi Aramco In 2015, the Ruwais refinery was the refinery. The upgrade, to be
closed its Jeddah refinery to expanded to process an additional completed by 2022, is to add new
convert it into a distribution hub 417,000bbl/d by constructing units and also modify current units
for petroleum products. new units to produce gasoline, to process Upper Zakum offshore
naphtha, aviation turbine fuel, LPG, crude oil. A letter of award for EPC
Once current and planned kerosene, gas-oil, bunker fuel and contract of the new atmospheric
grassroots refinery end expansion other hydrocarbon derivatives. residue de-sulphurisation facility
projects have been completed, About US$10bn was invested in has recently been issued to a
Saudi Arabia’s total refining the expansion project, bringing consortium between Samsung
capacity is expected to increase to the overall refining capacity of the Engineering and CB&I.
more than 3.6MMbbl/d. Ruwais refinery to 817,000bbl/d.
The Ruwais refinery is currently To increase its high-value-added
The United Arab Emirates undergoing several upgrades downstream products, ADNOC
including a US$865m EPC successfully commissioned a
The UAE has three refineries: contract has been awarded to G&S 300,000bbl/d base lube oils
Ruwais (817,000bbl/d), Abu Engineering and Construction to facility at Ruwais in 2014, which
Dhabi (also known as Umm restore the residual fluid catalytic produces sulphur free, 500,000
Al-Narr) (90,000bbl/d) both cracking unit, which was damaged tonnes per annum of Very High
owned by ADNOC and Jebel Ali by a fire in 2017. Furthermore, Viscosity Index Group III base
(140,000bbl/d) refinery owned by US$3.1bn is going to be invested oils used for blending top-tier
the Emirates National Oil Company. to increase the crude flexibility of lubricants. Feedstock for the base

51
MARKET FOCUS: GCC

oil facility is from Ruwais refinery’s

hydrocracker unit and the output SUPPLY CHAIN OPPORTUNITIES ON THE RUWAIS REFINERY
is exported mainly to India, New units to be constructed: Modification of following units:
Bangladesh, Sri Lanka, Thailand
and Europe. • Hydrogen manufacturing units • Crude distillation unit
• Saturated gas plant • Saturated gas plant and
According to the BP Statistical • Atmospheric residue de- saturated LPG splitter
Review of World Energy 2017, the sulphurisation unit • LGO diesel hydro-treating unit
UAE exported 60.82m tonnes of • Sour water stripper under UOP licence
refined products to the following • Amine regeneration unit • HGO/LCO mild hydro-treating
regions and countries in 2016: • Sulphur recovery units unit under UOP licence
China (8.22MMtpa); Africa • Tail gas treating unit • Sea water system
(7.06MMtpa); Europe (6.81MMtpa);
Singapore (5.50MMtpa), Japan
(5.34MMtpa), India (5.10MMtpa); of total refinery output, mainly gasoline and fuel oil is higher than
Middle East (2.16MMtpa); South naphtha, kerosene and gas/diesel refining output. Thus, refining
and Central America (0.66MMtpa); oil. Demand for lighter distillate capacity expansion projects would
US (0.11MMtpa); Australasia products outside of region, allow it to meet international and
(0.06MMtpa); Other Asia Pacific especially from Asia Pacific is domestic demand.
(19.79MMtpa). growing. In February 2018 ADNOC
signed a three-year agreement to Emirates National Oil Company
Based on the JODI-Oil database, in supply up to 1MMtpa of naphtha is adding a new condensate
December 2016 the UAE produced to Malaysian Lotte Chemical Titan. processing train to the existing
3,419,000 tonnes of refined Currently, the UAE’s domestic Jebel Ali refinery, Dubai, to
products and exported about 49% demand for motor and aviation expand its daily capacity to

Refinery Operator 2017 refining 2018–20 To be Notes

capacity (bbl/d) additions (bbl/d) completed by
Ruwais refinery Abu Dhabi Oil 817,000 - 2022 Currently being upgraded
Refinery Co. (Takreer) to increase crude
processing flexibility
Abu Dhabi (Umm Abu Dhabi Oil 90,000 -
Al-Narr) refinery Refinery Co. (Takreer)
Jebel Ali refinery Emirates National Oil 140,000 70,000 Q4 2019 Expansion
Co. (ENOC)
Fujairah Modular Ecomar Energy 7,500 -
refinery Solutions FZC 
Fujairah refinery VITOL 82,000 -
Fujairah refinery Mubadala Investment 0 200,000 2020 New build refinery
Company
Fujairah Bitumen Gulf Petrochem 0 40,000 2020 New build bitumen plant
refinery
Total capacity 1,136,500 310,000

Table 10

The UAE’s refining capacity.

52
Gasoline 2010 2011 2012 2013 2014 2015 2016 2017 2018 Diesel 2010 2011 2012 2013 2014 2015 2016 2017 2018
–22 –22
Bahrain Euro 4 Euro 5 Bahrain Euro 2 Euro 5
Kuwait Euro 2 Euro 5 Kuwait Euro 2 Euro 5
Oman Euro 3 Euro 5 Oman No updates are available
Qatar Euro 3 Euro 4 Qatar Euro 2 Euro 5
Saudi Euro 2 Euro 2/Euro 3 Euro 5 Saudi Non-compliant with Euro standards Euro 5
Arabia Arabia
UAE Euro 3 Euro 4 Euro 5 UAE Euro 2 Euro 3/Euro 4 Euro 5

Table 11

Development of gasoline and diesel qualities in GCC countries.

Source: Centre for Environment and Development in the Arab Region and Europe.

210,000bbl/d. The US$1.1bn contracts for the project are yet to to lower the quantity of these
expansion project to be completed be awarded. substances.
by fourth quarter of 2019 will see
the addition of new LPG/naphtha ADNOC has announced plans to The Euro 6 standard requires
hydrotreater, an isomerisation invest approximately US$45bn to a 67% further reduction in NOx
unit, a kerosene hydrotreater and expand domestic and international emissions from diesel engines
diesel hydrotreater units. The refining, gas processing and its (compared to Euro 5) and
expansion of the Jebel Ali refinery petrochemicals business portfolio establishes similar standards for
represents the country’s efforts to over the next five years. As part of petrol and diesel. In Europe and
meet growing demand for energy; this strategy, ADNOC will increase in the United States, refineries
the export market is primarily its crude refining capacity by 60%. were converted to Euro 5 grade
Asia, where demand for refined New capacity expansions, possibly while Indian refineries are being
products is expected to increase at the Abu Dhabi (Umm Al-Narr) upgraded to produce Bharat Stage
by 15% by 2030. refinery, or even new grassroots VI emission standards, which is
refinery projects in Ruwais are equivalent to Euro 6 grade. In
Mubadala Investment Company envisaged in the near future. Europe, diesel and gasoline have
is developing a grassroots oil been limited to 10 parts per million
refinery in Fujairah with an initial (ppm) sulphur since 2009 (for on-
capacity of 200,000bbl/d to Plant upgrades: Clean road vehicles) and 2011 (non-road
meet growing demand for refining Fuel projects vehicles).
products by producing high-
grade gasoline, diesel and related Refinery upgrades to produce The United Nations Environmental
products. One of the purposes cleaner fuels are being carried Programme is working with the
of the US$3.5bn Fujairah refinery out to meet the latest stringent GCC countries to promote its
is to allow tankers to load their environmental regulations for Partnership for Clean Fuels and
cargo at the northern emirates low sulphur transportation fuel. Vehicles initiative. As the global
thereby avoiding the potential This has mostly been driven by demand for clean fuel increases,
bottleneck of the Strait of Hormuz. European standards of low sulphur and as the refining industry of
Development of the refinery was and cleaner fuels, including Euro GCC countries is mainly export
put on hold indefinitely in February 5 and Euro 6 specifications. oriented, GCC countries must
2017, however, in June 2017 Gasoline and diesel produce large produce fuels that meet the
the project was restarted. The quantities of CO, HC, NOx, PM, requirement of the destination
refinery will include a power plant, carbon dioxide (CO2), sulphur countries. Fuel quality in the
which will be connected to local oxides (SOx) and toxic substances; GCC varies widely as shown in
electrical power grid. Main EPC Euro standards were introduced Table 11.

53
MARKET FOCUS: GCC

GCC countries are investing • Naphtha Hydrotreating is an processing technology (www.

billions of dollars in clean fuel essential step for refiners to chevrontechnologymarketing.
projects (CFPs) to produce produce cleaner gasoline from com/about_che_tech.aspx)
clean fuels, meeting Euro 4 and different feedstocks: straight
Euro 5 specifications as well as run, condensate, cracked • Honeywell UOP, Unicracking™,
diversifying their product portfolio. naphtha feedstocks. The Kero/Jet Fuel Sweetening
Following completion of these Naphtha Hydrotreating process Merox™ process, HYT-
CFPs, the GGC countries will be is also important to pre-treat 4118 Unity™ hydrotreating
able to respond more flexibly to the naphtha for downstream units, catalysts to produce ultra-low
market dynamics of low sulphur such as paraffin isomerisation sulphur diesel fuel  (www.uop.
fuel for transport and ships. and catalytic reforming, com/processing-solutions/
where strict specifications are refining/diesel-jet/)
CFPs involve the construction of required, and catalysts used
new units, along with the upgrade are very sensitive to impurities • KT-Kinetics Technology
and retrofitting of current units to for hydrotreater, sulphur
reduce sulphur, carbon monoxide, • Isocracking technology is recovery units, hydrogen
nitrogen oxide, hydrocarbons and applied to convert feedstocks and syngas production
particulate matter in both diesel into high quality middle (www.kt-met.com/en)
and gasoline vehicles. These units distillates and lube base oil
are also installed to facilitate higher base stocks. A two-stage • Shell Global Solutions’
conversion, enhance productivity hydrocracker with intermediate hydrotreating process
and lower production cost. distillation represents the most (www.shell.com/business-
common process configuration customers/global-solutions/
CFPs generally involve the to maximise middle distillates. refinery-technology-licensing/
following major proprietary Most of sulphur and nitrogen hydrotreating.html)
process technologies, process compounds are removed
units and catalysts: from the oil and many of the • Topsoe for naphtha/diesel/
aromatics are saturated. The kerosene hydrotreating
• Hydrotreating/ overhead liquid and vapor from technologies and catalysts
hydrodesulphurisation the hydrocracker fractionator is (www.topsoe.com/
process is applied to products further processed in a light ends processes/hydrotreating)
(diesel, kerosene, naphtha) recovery unit where fuel gas and
produced from the atmospheric LPG and naphtha are separated More traditional units such as
distillation column to reduce visbreaking units, atmospheric
sulphur, nitrogen and aromatics • Hydrogen production unit residue desulphurization units,
level. The raw products contain is also constructed to supply hydrogen recovery units, sulphur
more than 500ppm of sulphur, hydrogen for reactors in the recovery units, sour water stripper
so efficient desulphurisation aforementioned processes units, sweet water treatment units
process is applied using a and delayed coking units are also
catalyst in the presence of The major process technology being upgraded/constructed to
hydrogen in high-pressure licensors for CFPs are: support the CFPs.
reactor to produce ultra-low-
sulphur products. Hydrogen • Axens (www.axens.net/ Bahrain
eliminates sulphide by forming our-offer/by-products/
hydrogen sulphide gas process-licensing.html) Bahrain completed the US$210m
Gas Desulphurisation project at the
• Diesel hydrotreating process • Chevron Lummus Global, LC- Sitra refinery in 2010 by installing
will produce ultra-low sulphur FININGTM and ISOCRACKING® a 500 tonnes per day sulphur
diesel (ULSF) (<10ppm) technologies, residue hydro recovery unit, a tail gas treating

54
 Chevron Lummus Global US$1.46m consultancy deal to masterplan the project.
FEASIBILITY
(October 2009)

FEED Technip (Rome and Abu Dhabi), US$55m. (September 2014)

Chevron Lummus Gloal, over US$100m for the license of its LC-FININGTM and
TECHNOLOGY LICENSORS ISOCRACKING® technologies and engineering design packages for the new residue
hydrocracking and vacuum gasoil hydrocracking units for the project. (October 2014)
LSTK EPCC contract (US$4.2bn) to JV between TechnipFMC (Rome and Abu Dhabi),
EPCC
Samsung Engineering (Seoul), Técnicas Reunidas (Madrid). (December 2017)
Engineers India, US$126m for Phase 1, FEED (August 2014).
PMC
WorleyParsons, US$87m to manage, monitor and appraise of FEED, EPC and other
contracting activities. (December 2015)

Tecnhip (Abu Dhabi) for EPCM contract worth a total of US$63.4m EPCM of new two 10MW
steam turbo-generators as well as the housing and substation at the refinery (October 2009)

HSBC and BNP Paribas as joint financial advisors (January 2013)

SUB-CONTRACTORS
Technip to modify Sulphur Recovery Unit (US$16.6m). (April 2013)

JGC corp. for EPC of enhanced fire protection system (EFPS) (February 2017)

Figure 30

Major contractors involved in Sitra Refinery Upgrade project.

Source: EICDataStream.

unit, two sour water stripping units, due to debates over scope and a strong response. Export credit
an amine treating unit; upgrading financial concerns. The major agencies, which may include
existing sulphur and amine units. The challenge associated with the UKEF, are expected to play a key
US$5.5bn Sitra Refinery Upgrade project is financial, as the fiscally role in backing a component of
project (scheduled to start-up in struggling government, which was the project financing. Samsung
2022), will enable the refinery to subjected to another credit ratings Engineering’s presence in the
produce clean fuels with a sulphur downgrade in December 2017, is winning consortium of the EPC
level below 10ppm. The ageing units trying to raise international debt contract is likely to attract support
such as the fluid catalytical cracker finance with an 18-year maturity from the South Korean agencies.
unit will be upgraded. including a four-year construction
period for the project. BNP Kuwait
Figure 30 shows the contractors Paribas and HSBC were selected
involved in the US$5.5bn Sitra as the project’s financial advisers. Kuwait is investing around
Refinery Upgrade project. Bahrain Petroleum Company ’s US$16bn to upgrade its Mina
EICDataStream provides in-depth owner, the government’s Oil & Al Ahmadi and Mina Abdullah
project information on the supply Gas Holding Company (NOGA refineries as part of the CFP. The
chain opportunities on offer at the Holding), has successfully debuted project involves the construction
project. in international bank and bond of new units (naphtha hydrotreater,
markets over the past two years kerosene hydrotreater, diesel
The execution of the project is while regular sovereign Eurobond hydrotreater, sulphur recovery,
taking longer than anticipated issues have continued to receive delayed coking, sweet water

55
MARKET FOCUS: GCC

treatment units) as well as a – CFP (start-up scheduled for reactors for three atmospheric
revamp of five units (including a 2019) is shown in Figure 31. residue desulphurisation units.
desulphurisation unit) from the For a more detailed overview Their scope of work included
decommissioned Shuaiba refinery of this project, including supply supply, test and inspect between
to meet international market chain opportunities as well as six and 12 reactors.
requirements for low-sulphur, contracting activity for the US$7bn
Euro-quality fuels. Clean fuels to Mina Abdulla refinery – CFP (start- The latest technology-licensing
be produced at both refineries up expected in 2018), please visit contract was awarded to
will conform to the Euro-4 EICDataStream. Honeywell UOP in 2017.
environmental specifications. Honeywell UOP will supply its
Kuwait’s grassroots Al Zour Selectfining™ unit to produce
Kuwait National Petroleum Company refinery (start-up in 2020) low-sulphur gasoline; a
has finalised a US$3.98bn loan will produce ultra-low-sulphur 66,000bbl/d CCR platforming™
provided by 11 banks including diesel (<10 ppm) that meets EU unit with a 74,000bbl/d naphtha
Islamic lenders, led by the National environmental standard. Low hydrotreater to make gasoline
Bank of Kuwait and Kuwait Finance sulphur fuel oil produced at the blend stock.
House in 2016 and signed a refinery will also be supplied
US$6.25bn loan agreement with to local power plants. The Oman
international lenders and export 180,000bbl/d hydrodesulfurization
credit agencies in 2017. The unit, developed by Shell The US$2.1bn Sohar Refinery
agencies involved in the financing Global Solutions, will include Improvement project (SRIP) (start-
are Korea Trade Insurance dewaxing catalyst technology. up 2018) will maximise additional
Corporation (K-Sure), the Export- Chevron Lummus Global has gasoline and diesel production
Import Bank of Korea, Italy’s been contracted to provide its to meet Euro 4 parameters for
SACE, Japan Bank for International technology for atmospheric fuels. New hydrocracker (Chevron
Cooperation, Nippon Export and residue desulphurisation units. Lummus technology), sulphur
Investment Insurance, Atradius Four contracts worth around recovery, amine regeneration
Dutch State Business and UK Export US$600m were awarded to isomerisation units were added
Finance. SACE has guaranteed manufacturing contractors: ATB and residue fluid catalytic cracking
US$625m. Kuwait National Riva Calzoni, Belleli Energy, unit (by MAN Diesel & Turbo) was
Petroleum Company has selected GE Nuovo Pignone and Japan revamped at the Sohar refinery.
a group of international banks to Steel Works for the supply of 40
provide the financing under the Saudi Arabia
coverage of K-Sure, SACE, Atradius
and UK Export Finance. The loan The Kingdom is investing more
is co-financed with Sumitomo than US$3bn to upgrade its
Mitsui Banking Corporation (lead refineries to produce clean
arranger), the Bank of Tokyo- fuels. The US$300m Petro
Mitsubishi UFJ, Mizuho Bank, and Rabigh Integrated Refinery &
KUWAIT’S REFINING
the Tokyo branch of The Hongkong Petrochemical Complex - Phase
and Shanghai Banking Corporation CAPACITY IS EXPECTED TO II - Refinery CFP(start-up Q1 2019)
Limited (HSBC). Nippon Export is part of Saudi Arabia’s policy of
and Investment Insurance provides
INCREASE BY 615,000BBL/D significantly reducing the sulphur
insurance for the portion co- IN 2019, THROUGH THE content of its refined products.
financed by the four private-sector KT-Kinetics Technology’s naphtha
banks. CONSTRUCTION OF hydrotreater unit with a capacity of
THE AL ZOUR REFINERY 17,000bbl/d and sulphur recovery
Contracting activity for the unit (SRU-3) are being constructed
US$9bn Mina Al Ahmadi refinery to produce clean fuels.

56
 FEED FEED (November 2004)

Chevron Lummus Global (CLG) (February 2008)

Shell Global Solutions for hydrodesulphurisation (HDS) and two new sulphur recovery
units (February 2008)
TECHNOLOGY LICENSORS Haldor Topsoe for the naphtha hydrotreater, hydrogen plant and desulphurisation unit
revamp (February 2008)
Axens for fluid catalytic converter (February 2008)
Honeywell UOP for existing FCC and hydrocracker (February 2008)

CB&I for delayed coker unit (February 2008)

Samsung C&T US$136.4m Clean Fuels Projects (December 2012)
EPCC
Consortium Consisting of JGC, SK E&C, GS, US$4.8bn (February 2014)
CB&I, US$60m for 39 storage tanks and two spheres (March 2015)

Fluor for FEED (November 2004)

PMC
Foster Wheeler US$502m (October 2012)

Al-Meer Technical Services Co. (ALMEER) - EPC for instrumentation system (January
2006)
Larsen & Toubro - to supply reactors and pressure vessels US$421m (January 2008)
Siemens, US$120m contract to supply and install a 132kV substation AHRF “C”
substation (September 2013)
ITT SpA to provide engineering and procurement for hydrogen unit (October 2014)
SUB-CONTRACTORS
Heurtey Petrochem to provide engineering and procurement for the hydrogen process
furnaces (October 2014)
Manoir Industries to supply of furnace components. (July 2015)
GP Strategies Corp. to provide training, documentation and competency development
services for a five year period (September 2016)
SPIE Oil & Gas Services to provide commissioning management and support sevices

Figure 31

Major contractors involved in the Mina Al Ahmadi Refinery CFP.

Source: EICDataStream.

The Yanbu Aramco Sinopec refinery to supply low sulphur The US$3bn Ras Tanura Refinery
Refining Company Ltd’s (YASREF) clean transportation fuel, diesel Clean Fuels and Aromatics
Yanbu Clean Fuels Interfacing and gasoline for domestic project (start-up 2021) involves
Facilities project (start-up distribution. In April 2017, the modifications of units at the Ras
2019) involves the construction EPC contract was awarded to Tanura refinery to produce clean
of clean fuels interfacing Dayim Punj Lloyd Construction fuels with low sulphur content that
facilities. The project is to Contracting Company Ltd, a Punj meet international standards for
interface the YASREF refinery Lloyd subsidiary, on a lump-sum diesel and gasoline. The project
with Saudi Aramco’s Yanbu turnkey basis. will also see the construction

57
MARKET FOCUS: GCC

of a 140,000bbl/d naphtha need to explore is finding new

hydrotreater, a 90,000bbl/d export markets, as the GCC’s key
catalytic cracking reformer, a export market, China transitions
65,000bbl/d isomerisation unit. to petrochemical self-sufficiency.
Traditionally, the GCC countries
Grassroot refineries in Yanbu and have been using ethane as
SAUDI ARABIA IS THE
Jizan will produce clean fuels from feedstock for steam crackers,
start-up. BIGGEST REFINING CENTRE however, another major challenge
in the GCC petrochemical sector is
The United Arab Emirates
IN THE REGION WITH NINE the shortage of competitive ethane
REFINERIES AND A TOTAL feedstock, due to high demand for
The US$1bn Jebel Ali Condensate gas in energy-intensive industries
Refinery Expansion project(start- CAPACITY OF 2.9MMBBL/D and in gas-fired power generation.
up Q4 2019) will see the To overcome this, some countries
construction of additional in the GCC are developing mixed-
process units such as new Diversifying portfolios: feed steam crackers to utilise
LPG/naphtha, an isomerisation the GCC’s petrochemical naphtha from local refineries as
unit, kerosene hydrotreater, and chemical projects additional feedstock.
and a diesel hydrotreater to
produce clean fuels meeting As the demand for petrochemicals, Steam cracking
Euro 5 fuel grade standards. plastics and chemicals is forecast
Axens, Honeywell UOP and KT to grow, the GCC countries Steam cracking is one of the most
have provided the licensing are investing multi-billions of technically complex and energy
technologies. dollars to develop chemical and intensive process in which a
petrochemical projects either by feedstock (ethane, propane, butane,
In summary, the multi-billion expanding capacities of current naphtha, LPG, etc) is introduced
upgrade projects described plants or constructing new into a series of furnaces, which
will allow the GCC countries to facilities to diversify their product consists of a convection zone and
produce clean fuels that meet portfolios to produce higher-value a radiant zone. In the convection
Euro 4 and Euro 5 standards by products and focus on boosting a zone, hydrocarbon feedstock is
2022, increasing the region’s new set of downstream industries pre-heated and mixed with steam
export competitiveness. However, in the region. and heated to high temperature. In
not all of the region’s refineries the radiation zone the temperature
are undergoing upgrades to The GCC countries have captured is increased up to 850C, where
meet the latest standards. New a significant share of global pyrolysis reaction takes place with a
upgrade projects related to petrochemical output over the short residence time (milliseconds).
CFPs are envisaged in the near years due to the availability of Process fluid is then passed
future, e.g. Oman’s Mina Al Fahal low-cost gas feedstock from oil through a quenching, compression,
refinery, Qatar’s QP refinery, and gas production. However, caustic scrubbing and drying
Saudi Aramco’s Yanbu refinery, changing dynamics, such as stages. Several fractionating units
the UAE’s Abu Dhabi (also known reduced feedstock advantages, separate the products in the cold
as Umm Al-Narr) and Fujairah growing economic competition section producing olefins (ethylene,
refineries. from the growth of shale in the propylene), aromatics (benzene,
US as well as coal-to-chemicals toluene, xylene), fractions of C4 and
The region’s major opportunities in China are forcing the GCC C5 and methane/hydrogen step by
for the supply chain in chemical/ countries to look at alternatives step.
petrochemical projects are to remain competitive in the
described in the next sections of petrochemical industry. One of The products obtained from a
the report. the alternatives the GCC countries steam cracker depend on the

58
 Natural Steam Products from
gas separation
Ethylene
Gas
separation
unit

Ethane, propane, Propylene

Gas
butanes Quench
Mixed feed compression
cracker up
Feed 185°C Separation
to 850ºC (no 5–6 stages
catalyst)
Naphtha, butane, 1–2bar Methane/
35 bar
and lighter gas oil hydrogen

Crude C4
Refinery butadiene
mixed
butylenes
Pygas liquid by-products (benzene, toluenes,
Crude oil Fuel xylenes, C5/C5 non/heavy aromatics

Figure 32

Simplified schematic of the steam cracking process.

feedstock type, the hydrocarbon-

to-steam ratio, the cracking
temperature and furnace
residence time. Cracking ethane
produces higher yield of ethylene
product whereas using naphtha
produces higher yield of aromatics
derivatives and fractions of C4
and C5. Butadiene in the C4
fractions and isoprene in the C5
fractions are converted to produce
synthetic rubber such as tires for
cars. Other derivatives from a
steam cracker can be converted
to polyethylene resin, ethylene
glycol, vinyl chloride resin, acetic
acid, styrene, alpha olefins,
and aromatic derivatives, such
benzene and xylenes which are
used in large quantities in general-
purpose resins and fibres. Figure 33

Schematic drawing of a steam cracker.

Supply chain opportunities to
Source: Linde.
procure parts of a steam cracker

59
MARKET FOCUS: GCC

furnace, including burners, cast

tubes and fittings for use in high TECHNIPFMC
temperature, steam drum, UK-based TechnipFMC is one in the market leaders for mega- cracker
stack, damper, fan, decoking technologies for ethylene production.
off-gas separator, electrical and
instrumentations. It has supplied its steam cracker technology for the following projects:

Other major equipment associated • The Sabic – YanSab llefins complex in Saudi Arabia – a 1.7MMtpa
with steam cracker process steam cracker, using ethane and propane as feedstocks
include heat exchangers, steam
generator, fractionator, distillation • The Petro Rabigh integrated refinery and petrochemical
column, the drying column, complex in Saudi Arabia, which will produce 1.5MMtpa of ethylene
columns for de-methaniser, de- based on ethane feedstock
ethaniser, de-propaniser, splitters
to separate ethene from ethane, • The Sadara facility in Saudi Arabia – the world’s largest mixed
and splitters to separate propene feedstock cracker (ethane, LPG, naphtha), designed for 1.5MMtpa of
from propane. ethylene and 0.5MMtpa of propylene

The region’s first mixed-feed • Ras Laffan in Qatar – a 1.3MMtpa ethane cracker
cracker (MFC), which uses ethane
and naphtha as feedstock, was • Sharq in Saudi Arabia – a 1.3MMtpa ethylene plant based on ethane
constructed in Yanbu’s Jubail and propane cracking
Industrial City II by a JV between
Saudi Aramco and Dow Chemicals. www.technip.com/sites/default/files/technip/fields/publications/
In addition, Saudi Aramco Total attachments/ethylene_june_2015_web_0.pdf
Refining & Petrochemical is
considering the addition of an
MFC that would use output from feedstock, reduced transportation projects are export orientated,
its Jubail refinery to produce costs, energy savings and they are also needed to meet
linear alpha olefins, poly alpha flexibility on production of high the domestic demand in the
olefins and elastomers. Another value products depending on region. According to the Gulf
MFC is planned by a JV between market requirement. Petrochemicals and Chemicals
Saudi Aramco and SABIC at the Association (GPCA) the import
grassroots Yanbu crude-oil-to- Oman is planning to include of chemical products in 2015
chemicals plant. an integrated petrochemicals increased by 55% from 2005 to
plant with an MFC at the under 21.6m tonnes. The chemicals
A new trend in the region also development Duqm refinery. industry contributed to around
involves integrating new build US$43.8bn to the GCC economy
petrochemical and aromatics The Kuwait Integrated in 2016 as countries in the region
plants with refineries to drive Petrochemical Industries Company advance mega-projects targeted
maximum efficiency and flexibility. is considering building an MFC at to meet growing demand from
Integration processes also its Al Zour petrochemical complex; Asia (source: the GPCA).
contribute to improved refinery the products from this complex
economic performance. Added- are primarily targeted at Asia, According to EICDataStream,
value is achieved by the integration with secondary markets being the more than US$70bn is planned
of different units, sharing of units, Middle East and Europe. for investment by GCC nations
the transfer of products between over the next decade to
refining and petrochemicals, Although the majority of these increase region’s chemical and
recycled hydrogen used as chemical and petrochemical petrochemical capacity.

60
 Methane
Condensate
Ethane Ethylene
Natural gas
splitter
NGL
Steam cracker Propylene
Naphtha

Hydrogen Butadiene

Reformate Benzene
Aromatics recovery Toluene
Gasoline blend Xylene
Crude oil Refinery

VGO/residue

ETBE
FCC complex Propylene
Gasoline blend

Diesel blend

Figure 34

Simplified schematic of refinery and petrochemicals integration process.

Bahrain purified terephthalic Aacid (PTA), Qatar

polyethylene terephthalate, methyl
Kuwait’s Petrochemical Industries tert-butyl ether (MTBE), butane, Qatar Petroleum Company is
Company and Bahrain’s National pyrolysis gasoline and other investing about US$400m to
Oil and Gas Authority have products. expand its Mesaieed ethylene plant
signed a deal to construct a capacity from 800,000 tonnes per
US$1.5bn aromatics complex Duqm Refinery and annum to 1.2MMtpa.
in Bahrain. The plant will be Petrochemical Industries
integrated with Bahrain Petroleum Co, a JV between Oman Oil In addition, the company is
Company’s Sitra refinery and Company and Kuwait Petroleum planning to develop a new world-
will provide basic petrochemical International is planning to scale ethane cracker complex in
intermediates such as benzene, integrate a petrochemicals Ras Laffan, which will increase
toluene, xylene and a few others, plant with the Duqm refinery, country’s ethylene capacity by
as well as any related facilities. currently under development. more than 1.6MMtpa in 2025.
The facility will have a capacity of The configuration of the Feedstock for the new complex will
1.44MMtpa. petrochemicals plant is still be ethane produced primarily from
undecided but will include the North Field Capacity Expansion
Oman the main petrochemical project and the new LNG trains to
products such as polyethylene, be built in Ras Laffan.
More than US$10bn of CAPEX polypropylene etc. The bankable
is planned for chemical and feasibility study is being carried Kuwait
petrochemical projects that will out by Wood, which will review
increase Oman’s production the volumes and compositions Kuwait Integrated Petrochemical
capacity for polyethylene, of petrochemical feedstock Industries Company developing a
polypropylene, acetic acid, available from the Duqm refinery. US$12bn petrochemical complex

61
 SYRIA

MARKET FOCUS: GCC IRAQ

JORDAN
ISRAEL

1) Sitra refinery – Feedstock: naphtha from 4

5
aromatics complex Sitra refinery
K

Bahrain Petroleum Products: benzene,

Company/ National toluene, xylene, ethylene
Oil and Gas Authority/ glycol, ethylene and
Petrochemical Industries EGYPT
other products
Company
Project stage: FEED
8 SAUDI
Estimated CAPEX: (EPC tender in 2018) ARABIA
US$1.5bn
Estimated start-up:
Configuration: 2022
1.44MMtpa naphtha
cracker

2) Duqm Products: polyethylene,

petrochemical plant polypropylene 6
Duqm Refinery and Project stage: feasibility
Petrochemical Industries
SUDAN
Co (DRPIC) Estimated start-up: 2025 ERITREA
YEMEN
Figure 35
Estimated CAPEX:
Major GCC downstream developments.
US$1bn

DJIBOUTI
3) Duqm acetic acid Feedstock: synthetic gas

BP/Oman Oil Co (OOC) Products: acetic acid

SOMALIA
Estimated CAPEX: Project stage: feasibility 5) Al Zour LPG, naphtha and
ETHIOPIA
US$1bn petrochemical condensate
Estimated start-up: 2024 complex – olefins III
Products: 1.4MMtpa of
Kuwait Integrated ethylene, 450,000tpa
4) Al Zour Products: styrene, Petrochemical Industries of PP, 450,000tpa of
petrochemical paraxylene, polyethylene Company/Petrochemical LLDPE, 450,000tpa of
complex – aromatics II terephthalate, purified Industries Co HDPE and 625,000 tpa
terephthalic acid, of ethylene glycol
Kuwait Integrated isobutane Estimated CAPEX:
Petrochemical Industries US$7bn Project stage: EPC
Company/Petrochemical Project stage: EPC prequalification
Industries Co prequalification Feedstock: mix of
ethane, off gases, Estimated tart-up: Q2
Estimated CAPEX: Estimated start-up: Q2 propane and 2022
US$5bn 2022 combinations with

62
 IRAN

8) Yanbu crude-oil-to- Ethane from integrated

chemicals complex Yanbu refinery
KUWAIT

7 SABIC/Saudi Aramco Products: 9 MMtpa of

1 chemicals and base
Estimated CAPEX: oils including ethylene,
BAHRAIN
9
US$20bn propylene, butadiene,
benzene, toluene and
QATAR 10 Configuration: Direct xylene
processing/Mixed-Feed
Cracker Project stage: PMC
UAE

OMAN Feedstock: Naphtha/ Estimated start-up: 2025

9) Borouge 3 – new Feedstock: Propylene from

2 polypropylene plant Takreer’s new PDH unit
3
(PP5)
Products: 500,000 tpa
Borouge (Abu Dhabi of polypropylene
6) Jizan (Jazan) acid, 1 MMtpa
Polymers Company)
petrochemical plant – of polyethylene
Project stage: Pre-EPC
Pan-Asia PET terephthalate (PET),
Estimated CAPEX: (EPC to be awarded)
200,000 tpa of
US$550m
Royal Commission for engineering plastic,
Estimated start-up: 2021
Jubail and Yanbu (RCJY)/ 200,000 tpa of thin
Pan-Asia PET Resin film, 200,000 tpa of 9) Borouge 4 downstream derivatives
(Guangzhou) polyester fibre. units for both polyolefin
Borouge (Abu Dhabi and non-polyolefin
Estimated CAPEX: Project stage: Polymers Company) products
US$3.8bn Feasibility
Estimated CAPEX: Products: Polyolefins
US$10bn (polyethylene and
Products: 2.5 MMtpa of Estimated start-up:
A polypropylene) and non-
purified terephthalic 2022 Configuration: 6 MMtpa polyolefin products (e.g.
mixed feedstock cracker benzene, butadiene).
7) Jubail Satorp Feedstock: 50% ethane
integrated and refinery gas from Feedstock: Existing Project stage: Pre-FEED
petrochemical the Jubail Satorp feedstock available
in Abu Dhabi and Estimated start-up: 2023
complex refinery

Saudi Aramco Total Products: ethylene 10) Ruwais refinery Products: 4.2 MMtpa of
Refining & Petrochemical and related high-added complex – Gasoline gasoline supply and 1.6
Co. (SATORP) petrochemical products and Aromatics project MMtpa of aromatics

ADNOC Refining Project Stage: Pre-EPC

Estimated CAPEX: Project stage: FEED
(EPC to be awarded)
US$5bn
Estimated CAPEX: US$1bn
Start-up: 2025 Estimated start-up: 2023
Configuration: 1.5 MMtpa Feedstock: Naphtha
mixed feed hydrocracker from Ruwais refinery

63
MARKET FOCUS: GCC

in Al Zour, which will be integrated in Yanbu Industrial City with the during the first 10 years following
with grassroots 615,000bbl/d goal of increasing number of its start-up. In August 2017, Dow
Al Zour refinery, currently under value-added manufacturing and Chemical announced that it plans
construction. transformation products. to buy an additional 15% stake,
increasing its stake to 50% in
The petrochemical complex will The recently completed Sadara Chemical Company.
consist of aromatics II and olefins US$19.3bn Sadara chemical
III facilities, the feedstock will plant fits with the Kingdom’s A whole host of future supply chain
be supplied from the refinery. ambitions to diversify its economy. opportunities will be created by
Feedstock for the project will The world’s largest integrated the US$20bn Yanbu crude-oil-to-
be a mix of ethane, off gases, chemicals complex, developed by chemicals plant, which will be the
propane and combinations with a JV comprised of Saudi Aramco region’s largest oil to chemical
LPG, naphtha and condensate. The (65%) and the Dow Chemical plant when completed in 2025.
aromatics II facility will produce Company (35%), is the first
500,000 tonnes per annum of chemical facility in the Kingdom In support of Vision 2030, Saudi
styrene and 500,000 tonnes per that uses naphtha as feedstock. Aramco and SABIC have created
annum of paraxylene. The olefins a JV to establish a fully integrated
III facility will have a cracker with a The complex has an MFC, which oil-to-chemicals complex in Saudi
capacity of 1.4MMtpa of ethylene, uses ethane and naphtha to Arabia’s Eastern Province, which will
450,000tpa of polypropylene, produce 1.3MMtpa of ethylene, create about 100,000 direct and
450,000tpa of linear low-density 400,000 tonnes per annum of indirect jobs. The project involves
polyethylene, 450,000tpa of propylene and 26 world-scale a construction of an MFC, which
high density polyethylene and manufacturing units that produce will produce ethylene (2.8MMtpa),
625,000tpa of ethylene glycol. more than 300 different chemical propylene, butadiene, benzene,
The products are primarily products, including a variety of toluene and xylene. These will be
targeted at Asia, with secondary specialty chemicals as part of fed into downstream processing
markets being the Middle East the Vision 2030 plan to expand facilities that will be constructed as
and Europe. As of January 2018, its petrochemicals downstream. part of the complex. Wood and KBR
Kuwait Integrated Petrochemical Fourteen of the 26 manufacturing have been selected as the project
Industries Company is preparing units will produce specialty management contractors to provide
to start the pre-qualification of chemical and plastic products Pre-FEED, FEED and PMC services
bidders for the EPC contract, previously only available through to share the project’s massive
documents should be released by imports to the region; overall workload.
Q1 2018. over 3m tonnes of performance,
value-added chemical and plastics It is understood that the oil-to-
Saudi Arabia products will be produced (such as chemicals process will start
amines, glycol ethers, isocyanates, by cracking the crude oil in a
Saudi Arabia has set a wide range polyether polyols, polyethylene, hydrocracking unit which removes
of strategic and economic goals polyolefin elastomers, propylene sulphur and significantly increases
under its Vision 2030 to diversify glycol and propylene oxide). the crude’s boiling point breaking
from crude oil export. The down the heavy oil into shorter-
petrochemical/chemical sector Sadara will market products to chain hydrocarbons. The gas-oil
has a potentially crucial role to customers located within the and lighter compounds are then
play in Vision 2030 for a diversified Kingdom and the Middle East introduced to a steam cracker
and sustainable economic future. area, as well as Asia and Europe. and the heavier products to a
The National Transformation The JV is expected to deliver proprietary Aramco-developed
Program 2020 was introduced as EBITDA margins of 35-40% and deep fluid catalytic cracking unit
part of Vision 2030, with initiatives a stream of equity earnings for that will increase the yield of the
to develop new infrastructures Dow averaging US$500m annually olefin output.

64
 Contract/agreement
Dow M&T
Dow
Counterparty Shareholder agreement
arrangements
Contractual Saudi Aramco
relationship MAC
framework ABB Inc
agreement

Product Technology
marketing and Dow licence Dow
agreement

TECHNOLOGY
agreement

Catalyst
MARKETING
supply Dow
agreement

Various sales agreements for Technical

distribution in the Middle East services Dow
marketing zone agreement

Third party
technology Others
licence
agreement
SADARA
General
Saudi Aramco
services
and Dow
agreement

CONSTRUCTION
Land lease
RCJY and PA
agreement
Core facilities downstream Contractor
derivative units
Utilities
SEC and
supply
Ethane feedstock Marafiq
Saudi Aramco agreement
supply agreement
Third party
OPERATIONS

Naptha feedstock supply and Others

supply agreement Saudi Aramco logistics
agreement

Fuel oil
FEEDSTOCK

supply agreement Saudi Aramco Secondment Dow and

agreement Saudi Aramco
Sales gas Saudi Aramco
supply agreement
OS&T
Dow
agreement
Benzene feedstock Saudi Aramco
supply agreement

MOM/BSD
Toluene feedstock Dow
Saudi Aramco contract
supply agreement

Figure 36

The Sadara contractual structure.

Source: Milbank, Tweed, Hadley & McCloy LLP.

65
MARKET FOCUS: GCC

2007 MoU between Saudi Aramco and Dow Chemical EPC for diesel hydrotreater (US$430m) to Samsung
Engineering (unsuccessful: HHI, Hyundai E&C and
PMC contract to KBR (unsuccessful: Fluor, Foster SK E&C, Snamprogetti, Technip and Técnicas
Wheeler) Reunidas)

2008 FEED to KBR Additional PMC and to handle the utilities, offsites
and several of the aromatics units to Foster Wheeler

2010 The FEED work is being carried out by Amec Foster Technology for cracker to Technip
Wheeler, Jacobs and KBR with Technip carrying out
the engineering work for a dual-use cracker, which
could process both liquid naphtha and the gas ethane

2011 EPCM for the utilities and offsites package to Fluor Sub-contract to Alstom – Cerrey SA de CV to supply
oil and gas boilers and air quality control equipment
EPC contract for the mixed-feed cracker package to Daelim
Main automation contract (MAC) to ABB
FEED + EPC for chlorine plant to Jacobs
EPC main tank farm + specialist cryogenic tanks at
Fluor Transworld Services to develop offsite work the facility to Daewoo E&C

2012 EPCM for a propylene oxide (PO) to Foster Wheeler EPC for the ethylene oxide derivatives (EOD),
polyethylene oxide diacrylate (POD) and ethylene
BOOT contract to Linde to build the hydrogen, oxide shared system (EOSS) to Técnicas Reunidas
carbon monoxide and ammonia plants
EPC for HP-LDPE plant to Tecnimont
Procurement and construction of solution
polyethylene and specialty elastomers package to LSPB for a propylene oxide processing unit to
Larsen & Toubro ATCO Saudia JV Tekfen Construction

EPCM for three polyethylene trains to Jacobs EPC for the aromatic plant to JGC Gulf International
Engineering
Construction has commenced in the second half of 2012

2013 Sub-contract to provide HVAC units to Custom Air EPC to erect 28 tanks to Rotary Engineering
Products & Services
Sub-contract to supply blast proof cables and pipe
A fundraising package was officially signed seals to Roxtec

Sub-contract Eaton to supply motor control, power Sub-contract Metso to supply Neles and Jamesbury
distribution solutions and engineering services valves

2014 Sub-contact to provide management, control, and Sub-contract to supply manpower, management,
consultancy support personnel to Sepam supervision, skilled labour force, construction
and maintenance equipment, small tools and
consumables, and procure other equipment,
materials and services to Kentz

2016 EPC for expansion of asphalt production facilities to

SNC-Lavalin’s in-Kingdom entity, Saudi Arabian Kentz

2017 Project completed

Figure 37

Lifecycle of the Sadara chemical complex development.

Source: EICDataStream.

66
 Steam cracker Products

Crude oil Hydrocracker

Deep FCC Products

Figure 38

Simplified schematic of crude direct cracking.

In January 2018 Chevron Lummus its chemical and petrochemical Dhabi, by Cepsa and ADNOC. The
Global LLC (CLG) entered into a capacity of chemical, such as project includes integrating the
technology joint development ethylene, polyethylene, olefins and facility with the Ruwais refinery
agreement with Saudi Aramco. The aromatics. complex for feedstock. LAB
agreement involves development, is used in the manufacture of
commercialisation and marketing The United Arab Emirates biodegradable household and
of technology processes for industrial detergents and is also
the production of high-value ADNOC’s 2030 strategy aims used in house cleaners, fabric
petrochemicals from crude oil. to expand its petrochemical softeners and soap bars. LAB
production capacity from the production would be mostly
CLG’s hydroprocessing current 4.5MMtpa (following the exported to South and East Asia,
technologies, CB&I’s ethylene successful start-up of Borouge 3 where demand for the product is
cracker technology, along with in 2016) to 11.4 MMtpa by 2025. forecast to continue growing in
Saudi Aramco’s thermal crude to coming decades. Cepsa’s sole
chemicals (TC2CTM) technology In order to meet its 2030 shareholder is Mubadala, the UAE’s
will provide a platform for the strategy, Borouge, a JV between sovereign investment fund.
development, which is then ADNOC and Borealis, is planning
expected to be applied to the to construct the Borouge 4 In addition, new petrochemical
Yanbu crude-oil-to-chemicals petrochemical complex at the facilities located at the Ruwais
plant. Catalysts for the project are Borouge Complex in Ruwais, refining complex, for the Gasoline
predicted to be provided by Clariant, 250km from Abu Dhabi. The and Aromatics project are being
due to the recent acquisition of a proposed Borouge 4 complex developed to significantly increase
25% stake in Clariant by SABIC. will be integrated with ADNOC’s gasoline production capacity in the
refinery. Borouge 4 involves UAE by 4.2MMtpa and aromatics
A comprehensive engineering construction of a mixed feedstock capacity by 1.6MMtpa. Axens was
study conducted by IHS (July cracker, with total capacity of awarded the contract to provide
2016) states that direct cracking around 6MMtpa. The export process licence technologies. The
of crude oil could potentially destinations for the country’s FEED contract awarded to Amec
provide a cost advantage of products are the world’s fastest Foster Wheeler (now part of Wood),
US$200 per tonne of ethylene growing markets, including Asia, is expected to be completed in
produced over tradition refinery where demand for petrochemicals the first half of 2018. Jacobs was
and petrochemical process. is expected to double by 2030. appointed as project management
contractor for the FEED phase.
According to EICDataStream, The UAE’s chemical development ADNOC Refining is expected to
more than US$32bn is planned involves a construction of the new tender the EPC package in 2018.
for investment in Saudi Arabia 150,000tpa linear alkyl benzene According to sources, the project
from now until 2025 to increase (LAB) complex in Ruwais, Abu will take 50 months to complete,

67
MARKET FOCUS: GCC

once the package is awarded in local investors. US$2bn worth of example is the Emirates National
2018. finance was issued by Sukuk for Oil Company, which is self-
Sadara Chemical Complex. financing the US$1bn Jebel Ali
Condensate Refinery Expansion
How are downstream Islamic Development Bank is a project. After talks with regional
projects financed in multilateral development financing and international banks about
GCC countries? institution located in Jeddah, a potential loan, the Emirates
Saudi Arabia. The function of the National Oil Company shelved
Projects in the GCC countries are Islamic Development Bank is to its plan to raise debt financing
financed by the project developer’s participate in equity capital and because its existing liquidity and
existing liquidity and projected grant loans for productive projects projected cash flow will allow it to
cash flows or through debt and and enterprises besides providing back the refinery project without
equity from a combination of financial assistance to member raising external debt.
various sources. countries in other forms for
economic and social development. Loans from regional and
During high oil prices, GCC project The Islamic Development Bank international banks: most
developers were able to finance granted Saudi Aramco a US$120m countries in the GCC region have
the majority of a project’s CAPEX loan for the Jubail 2 project. active local and international
using their cash flows, however, banking sectors, which are
now they have to raise funds State owned Public Investment capable of providing significant
through foreign loans. Project Fund is a sovereign wealth fund liquidity. Asian banks in particular
developers seek support from of the government of Saudi are willing to provide a loan to
export credit agencies and funding Arabia. It seeks to invest through support a project so that their
from governments, Islamic bonds equity, loans or guarantees, and local engineering companies can
and also approach national and through allocations of public funds be more competitive in winning the
international banks for loans. to specific projects. The firm contract.
provides medium and long-term
Types of loans and financing loans to large-scale government In August 2017, Salalah Methanol
organisations and private industrial projects. Company’s Luban ammonia plant
Saudi Arabia’s Public Investment secured a 12-year US$728m loan
Sukuk issuance (Islamic bonds) Fund has given a $1.3bn loan from a mix of 12 international,
provides bonds in accordance to Aramco’s Jubail 2 project to regional and local banks. A portion
with the principles of Shari’ah, i.e. finance part of the Jubail refinery. of the loan is being used to refinance
Islamic law. The basic concept of the Omani company’s existing debt,
Islamic Sukuk is that holders of the Funding from the government: while the remaining US$443m is
Sukuk take a share in the profits GCC state governments also allocated for building an ammonia
of large enterprises or in their provide funds to finance project. The financial institutions
revenues. Sukuk holders claim an downstream projects. For instance, that provided the loan to Salalah
undivided beneficial ownership the government of Oman is Methanol Company are Export
in the underlying assets. contributing between USU$600m Development Canada, Bank Muscat,
Consequently, Sukuk holders are and US$1bn to fund the US$6.4bn BankDhofar, Standard Chartered
entitled to share in the revenues Liwa Plastics project. However, Bank, Societe Generale, ING Bank,
generated by the Sukuk assets as over the past three years, funding Ahli Bank Oman, Europe Arab Bank,
well as being entitled to share in from the GCC governments has Bank Sohar, Qatar National Bank,
the proceeds of the realisation of significantly reduced due to low Apicorp and National Bank of Kuwait.
the Sukuk assets. A Sukuk, worth crude oil prices. The UK’s Standard Chartered and
US$1bn was issued for Saudi local Bank Dhofar were mandated
Aramco’s Jubail 2 project. The Self-finance (cash flow from to arrange a US$300m loan for this
Sukuk issue was sold in riyals to project developers): a prime project in July 2016.

68
The US$2.1bn Sohar Refinery
Improvement project, implemented THE SADARA CHEMICAL COMPLEX
by Oman Oil Refineries and The total CAPEX on the Sadara chemical complex was US$19.3bn; about
Petroleum Industries Company, 65% of the total cost was funded through debt and the rest came from
was financed through 65% debt. Dow Chemical and Saudi Arabia’s balance sheets and equity investment.
A consortium consisting of 21
international and national financial Main project financing:
institutions have provided a loan. The US$12.5bn debt package consists of loans from commercial
Local banks contributing are Bank banks, export credit agencies, the Saudi Arabian state-owned Public
Muscat, National Bank of Oman, Al Investment Fund and the Islamic bond.
Ahli Bank, Bank Dhofar, Bank Sohar
and Oman Arab Bank. International • A US$6.7bn was provided through seven export credit agencies. US
banks involved are HSBC, Sumitomo EXIM has provided US$4.98bn, its largest ever commitment to date,
Mitsui Banking Corporation, KFW helping approximately 70 contractors from the US alone to get involved
IPEX Bank, Abu Dhabi Commercial in the project. COFACE (France), Euler-Hermes (Germany), K-Exim and
Bank, Qatar National Bank, the K-Sure (both from South Korea). Export credit agency direct loans were
Saudi National Commercial also subsequently granted by FIEM (Spain) and K-Exim
Bank, National Bank of Abu
Dhabi, Standard Chartered Bank, • UKEF provided US$870m, supporting UK based exporters including
Arab Banking Corporation, Arab Amec Foster Wheeler (now part of Wood Group), Fluor and Jacobs.
Petroleum Investment Corporation, An initial expression of interest from UKEF was issued in 2009, with
Ahli United Bank and Arab Bank. deal signed in 2013. UKEF agreed to provide risk policies to cover
commercial bank loans
Export credit agencies:
international credit agencies still • US$2.3bn of financing came from two Saudi government investment
offer the majority of finance in the funds.
GCC region. Export credit agencies
are public agencies and entities • US$2bn of funding was issued by Sukuk (Islamic bond). The bond was
that provide government-backed arranged by Riyad Bank, Bank Albilad, Alinma Bank and Deutsche
loans, guarantees and insurance Bank and issued following approval from the Capital Market Authority
to corporations from their home
country that seek to do business • Financial advisor to the sponsors: the Royal Bank of Scotland and
overseas in developing countries Riyadh Bank
and emerging markets. Export
credit agencies are now the world’s • Financial adviser to the export credit agencies and Public Investment
biggest class of public finance Fund: Greengate LLC
institutions operating internationally.
Collectively they exceed the size of
the entire World Bank Group and Export credit agencies are actively by Korea’s KExim and KSure, and
fund more private-sector projects providing financial support for Italy’s SACE.
in the developing world than any GCC projects to promote overseas
other class of finance institution. development and increase the Borouge 3, a JV between ADNOC
The major export credit agencies export. and Borealis, has taken a €200m
include: the UKEF (the UK), Hermes loan from ECA that will be used
(Germany), COFACE (France), SACE Examples of export credit to fund the development of a
(Italy), US EXIM (USA), JBIC (Japan), agency funding petrochemicals complex in Abu
Korea Trade Insurance Corp Dhabi. Austria’s Oesterrichische
(K-Sure) and Export-Import Bank The US$2.1bn Sohar Refinery Kontrollbank will provide the funds.
of Korea (KEXIM) (South Korea). Improvement project, supported Abu Dhabi Islamic Bank announced

69
MARKET FOCUS: GCC

that it has provided the financing

facilities to Hyundai Heavy UK EXPORT FINANCE
Industries for the offsites and UKEF is the UK’s official export credit agency, and a government
utilities package in the project. department, which provides a long-term financing to the UK supply
chain, its function being to support exports from the UK.
Oman Oil Refineries and Petroleum
Industries Company’s US$6.4bn UKEF support has supported 221 companies to export their goods to 63
Liwa Plastics project has received different countries around the world by offering finance and insurance.
a credit line of US$890m by UKEF has expertise in the energy sector and has been involved in many
some commercial banks and oil and gas projects including in the downstream sector.
fully guaranteed by SACE. CB&I
played a key role in the provision UKEF provides impartial guidance and assist in securing the right
of US$1.3bn multi-ECA financing financing for a competitive edge. UKEF support complements that of
for package 1 of the project. private sector providers, ensuring no viable export fails for lack of finance
The financing was secured in or insurance. With government backed finance or credit insurance,
a collaborative effort between exporters can ensure they can offer competitive terms alongside their
Oman Oil Refineries and Petroleum market leading products and services to attract overseas buyers.
Industries Company, CB&I and five
export credit agencies in 2016. For more information on UKEF products and services contact one of
its network of regional export advisers to get free independent advice.
The US$9bn Mina Al Ahmadi Or alternatively contact: customer.service@ukexportfinance.gov.uk,
CFP has set a new record for Telephone: +44 (0)20 7271 8010.
the largest export credit agency
backed corporate loan to date.
Kuwait National Petroleum industry. The UKEF provided UKEF provided US$157m in
Company’s has signed a support to the value of £3bn for support for the US$6.4bn Oman
US$6.245bn loan with international exports from UK manufacturers Oil Refineries and Petroleum
lenders and export credit agencies in 2016–17. The figures show that Industries Company Liwa
to finance its CFP. Agencies 79% of the companies that have Plastics project in Oman, which
involved in the project include benefitted from this support over includes: a gas extraction
UKEF, K-Sure, the Export-Import the course of the 2016–17 year facility, 300km of pipeline, and
Bank of Korea, SACE, Japan Bank were small and medium sized a new petrochemical plant to
for international Cooperation, enterprises. convert gas to plastics products.
Nippon Export and Investment UKEF supported CB&I’s UK unit
insurance and Atradius Dutch State Through UKEF’s bond support involvement in the project.
Business N.V. scheme, the Kuwait National
Petroleum Company was able
Export credit agencies, including to meet the requirements of Successful EPC
UKEF, were approached to provide the contract at the same time contractors
support for the Sitra Refinery as securing working capital to
Upgrade and Duqm Refinery support its business operations. Major international contractors
projects with agreements to be UKEF provided the Kuwait National are active in the GCC region and
finalised in 2018. Petroleum Company’s bank with have established service centres,
a guarantee for 80% of the bond, engineering offices or branches
According to UKEF, US$9.73bn meaning that there was no need to in Abu Dhabi, Al-Khobar, Doha,
was spent between 2010 and provide a deposit. This successful Dubai, Muscat and Sharjah. Figure
2014 supporting energy sectors contract has led to subsequent 39 shows the top EPC contractors
in developing countries; 46% business with the Kuwait National in the GCC region since 2010.
of which went to the fossil fuel Petroleum Company. European contractors, CB&I,

70
 18
16 2010 2011
14 2012 2013
12 2014 2015
10 2016 2017
8

6
4
2
0
s
d

&I
c

MC

n
g

n
ion

fa
da

t io
Lt

rin

io
CB

pe
tr o

pF
i

ct
at

ra
Co

e
un

i
Sa
ne

ru
ni
or

o
Pe
Re

rp
ch
al

st
rp

gi
tri

Co
En

n
Te
as

Co

Co
us

ic

ng

CI
ine
Ind

cn

&

CT
su
Te

g
so
im

rin
Ga
el

Sa

e
Da

ne
n
pa

gi
En
(Ja

GS
C
JG

Figure 39

Top EPC contractors since 2010.

Source: EICDataStream.

Petrofac, Saipem, Técnicas Reunidas Refinery Improvement project in developments, outside of the GCC
and TechnipFMC take the majority 2013, even though the JV’s bid region. Daelim Industrial Co has
of share in top EPC contractors was higher than its competitors. secured several EPC contracts in
list, followed by South Korean Iran, the main component of the
contractors (Daelim Industrial Co, Several EPC contracts have been contract includes providing the
GS Engineering & Construction and awarded to Daelim Industrial finance with loans for the projects
Samsung Engineering). Co for the Sadara project: being secured though South
EPC package 2; the polymeric Korean banks as well as South
Daelim Industrial Co was the first methylene diphenyl diisocyanate Korean export credit agencies.
construction company ever founded and toluene diisocyanate
in South Korea. Although Daelim production facilities, EPC package Técnicas Reunidas has received
Industrial is the top downstream 3; the aniline-formalin and DNT- 16 EPC contracts since 2010, the
EPC contractor in the GCC region nitric facilities and EPC for the majority of which were awarded
with a total of 17 contract awards mixed feed cracker package. to execute projects in Saudi
since 2010, the company has not A US$920m EPC contract for Arabia.
received any EPC contract in the the mixed feed cracker included
GCC countries since 2013. a US$249.7m award for its In 2012, Técnicas Reunidas was
subsidiary, Daelim Saudi Arabia to awarded four EPC contracts
Daelim Industrial Co Ltd in a JV construct the unit. in Saudi Arabia for the Jazan
with Petrofac has been successful grassroots export refinery, the
in securing an EPC contract for More recently the company Kemya complex, the Petrokemya
Oman Oil Refineries and Petroleum has been successful in securing acrylonitrile budadiene styrene
Industries Company’s Sohar EPCF contracts for downstream plant and the Sadara complex.

71
MARKET FOCUS: GCC

50 60%
45
50% 50%
40
35
40%
30
25 30%
25% 25% 26%
20
21% 20%
15
10 14%
12% 10%
10%
5
0 0%
2010 2011 2012 2013 2014 2015 2016 2017

Total EPC contractors Korean contractors and Korean JV Share of Korean contractors + JVs

Figure 40

Total EPC contract awards in GCC since 2010.

Source: EICDataStream.

In 2015, the company received JGC Corporation has been awarded contract from SABIC for setting up
contracts in Kuwait to execute EPC contracts in JV with GS an ethylene oxide-ethylene glycol
the Al Zour Refinery and Mina Engineering & Construction, and plant in Saudi Arabia. The project will
al-Ahmadi Refinery – Fifth Gas SK Engineering & Construction be executed in Jubail Industrial City
Fractionation and Condensate for Kuwait’s Mina Al-Ahmadi located in the east of Saudi Arabia.
Train projects. refinery. Following the successful
completion of Bahrain’s Sitra LPG Petrofac has two EPC contracts
In 2017, the company received five Revamp and Debottlenecking in Oman for the Duqm refinery
EPC contracts, three of which were project (EPC award in 2013), JGC and the Salalah LPG extraction
awarded for the US$3bn Haradh received two EPC contracts for the plant in 2017. Petrofac, in JV with
and Hawiyah Gas Development Sitra petrochemical plant expansion Daelim, is currently completing the
project in Saudi Arabia. Additionally, – the Urea plant and Sitra refinery US$2.1bn EPC contract for Oman’s
two EPC contracts were awarded upgrade projects in 2017. Sohar Refinery Improvement
to Técnicas Reunidas as part of a project. Petrofac is also currently
JV with South Korean contractors. Samsung Engineering received executing the following projects
Técnicas Reunidas in partnership an EPC contract for Kuwait’s Mina in the region: Saudi Arabia’s
with Samsung Engineering/ Abdulla refinery in a JV with CB&I and Jizan grassroots export refinery
TechnipFMC was awarded the EPC Petrofac. Three EPC contracts were (awarded in 2012), the Al Fadhili
for the Sitra Refinery Upgrade awarded to Samsung Engineering in gas plant (awarded in 2015),
project and in JV with Daewoo 2017, two of which were in JV with Kuwait’s Mina Abdulla refinery
Engineering & Construction to Technip and Técnicas Reunidas for (awarded in 2014), and the Bahrain
develop process units including the Sitra Refinery Upgrade project gas dehydration plant (awarded in
hydro-cracking, hydro-treating, and in JV with Petrofac for the Duqm 2015).
delayed coking, sulphur recovery, Refinery project, package 2 – utilities
hydrogen generation and merox and offsites. In December 2017, the Four contracts were awarded to
treating units for the Duqm refinery. company were awarded a US$700m TechnipFMC in 2013 for Bahrain’s

72
 CB&I Galfar Engineering & JGC (Japan Gasoline GS E&C
- Sasref - Jubail Refinery - Modernisation Contracting Corporation) (2) - Ruwais Refinery -
and Expansion - Luban Ammonia Plant - Sitra Petrochemical Residual Fluid Catalytic
(Salalah Ammonia Plant) Plant Expansion - Urea Cracking (RFCC) Unit
Punj Lloyd Plant - Post Fire Restoration
- Yasref Clean Fuels Interfacing Facilities Petrofac - Sitra Refinery - Project
Project - Salalah Liquefied Upgrade
Petroleum Gas (LPG) Overseas Ast
Saipem Extraction Plant JV Samsung - Jebel Ali Condensate
- Haradh and Hawiyah Gas Increment Engineering/ Refinery Expansion
Program - Hawiyah Gas Plant (HGP) SNC-Lavalin Technip/Técnicas
Expansion - Luban Ammonia Plant Reunidas Rotary Engineering
(Salalah Ammonia Plant) - Sitra Refinery - Ltd.
Samsung Engineering Upgrade - Jebel Ali Condensate
- Jubail United Petrochemical Company JV Daewoo Engineering Refinery Expansion
(JUPC) Complex - Third Ethylene Glycol & Construction/Técnicas
Unit Reunidas SA
- Duqm Refinery JV
Técnicas Reunidas (3) United Arab
Petrofac/Samsung Bahrain, 3 Emirates, 3
- Haradh and Hawiyah Gas Increment
Program - North, South and Satellite Engineering
Gulf Spic Contracting Company WLL
Gas Compression Plants -Duqm Refinery
- Mina Al-Ahmaid Molten Sulphur Handling Facility

Saudi Arabia, 7 Oman, 7 Kuwait, 1

Figure 41

EPC contract awards in 2017.

Source: EICDataStream.

Sitra refinery upgrade, the UAE’s Total EPC contracts awarded in Asian contractors have formed new
Das Island atmospheric flare gas the region by year shows that strategies which includes forming
revamp unit and the Das Island number of contract awards has JVs with Western engineering firms
Flare Handling and Emission significantly reduced since 2012. to secure contracts in the region.
Reduction project. TechnipFMC
is executing the UAE’s Jebel Ali Only 10 EPC contracts were Western engineering companies
Condensate Refinery Expansion awarded in 2014, half of which mainly provide technical expertise,
project (awarded in 2016) and were awarded to South Korean whereas East Asian contractors as
Bahrain’s Sitra Refinery Upgrade contractors. The percentage well as technical expertise, provide
project along with Samsung share of South Korean contractors labour and finance. The share of
Engineering and Técnicas Reunidas. being successful peaked in 2014; South Koreans contractors has
the companies were securing the subsequently increased in 2017
Other successful EPC contractors lump sum contracts by placing the in comparison to 2016. Financial
in the region include: Daewoo lowest bid price, however, most support has become more
Engineering & Construction, eTEC of these contractors have been important to win a project than
Engineering & Construction, unsuccessful in executing the ever and South Korean companies
Fluor, Hanwha Engineering and projects as per agreed schedule are seen as favoured contractors
Construction, Hyundai Engineering and cost. Delays and cost overruns as they bring funding with them
& Construction, Punj Lloyd, have made East Asian contractors through loans from local banks. A
Samsung C&T, SNC-Lavalin and SK unreliable to GCC project growing number of schemes are
Engineering & Construction. developers; consequently, East being funded with export credit

73
MARKET FOCUS: GCC

support brought in by contractors

and suppliers from South Korea. SUBSIDIARIES OF INTERNATIONAL
CONTRACTORS IN THE REGION
Figure 41 shows the latest EPC Bilfinger: Tebodin Middle East Ltd
contract awards. Daelim Industrial Co: Daelim Saudi Arabia
Fluor: Fluor Transworld Services
Increasing the private sector JGC: JGC Gulf International, JGC Middle East FZE, JGC Arabia Limited
contribution to their economies is a Larsen & Toubro International FZE: Larsen & Toubro ATCO Saudia JV
key pillar of the economic strategies SNC-Lavalin: Saudi Arabian Kentz
of every GCC country. Apart
from diversifying and reducing
its dependence on oil, the GCC expected to go ahead or start-up contract, which is expected during
countries are focusing on reducing on schedule, spending levels in the the year 2018.
dependence on imported materials region will remain relatively high in
and services towards localising, the coming years. Kuwait Integrated Petroleum
job creation and increasing supply Industries Company (KIPIC)
chain competitiveness. Saudi The FIDs on projects continue to is preparing to start the
Arabia’s In-Kingdom Total Value be delayed, examples being the prequalification of EPC bidders
Add programme aims to support Duqm refinery, the Sitra refinery for the proposed US$5bn Al Zour
country’s 2021 objective of upgrade and the Yanbu crude- oil- aromatics II complex in 2018.
reaching 70% of its spend from to-chemicals plant, which have Following successful completion
within the Kingdom. International been awaiting approval since 2017. of feasibility studies by Wood, it is
contractors have added subsidiaries The FIDs for the Duqm refinery and envisaged that PMC services will
to fulfil the region’s preference to the Sitra refinery upgrade are now be also appointed to Wood.
create opportunities for locals and expected in the first half of 2018.
contribute economic development The pre-qualification of EPC
by cooperating on the GCC Analyst’s forecast: future top bidders are also planned for the
countries’ industrial diversification. projects to keep an eye on proposed US$7bn Al Zour Olefins
The US$1.5bn Sitra refinery III project. The EPC documents
aromatics complex by Kuwait’s should be released in the first half
Future outlook Petrochemical Industries of 2018. It is yet unclear if KIPIC will
Company, Bahrain Petroleum decide to tender several packages
With over US$164bn of projects Company and National Oil & Gas with Olefins III and Aromatics II
planned or underway, the GCC Authority: Bahrain Petroleum plants as separate projects or as a
region has a substantial pipeline Company is planning to issue single mega project. There are still
of projects with numerous an invitation to bid for the EPC some sub-contracting opportunities
opportunities for the UK supply for under construction US$17bn
chain. Al Zour Refinery (aka New Refinery
Project) (start-up Q2 2020).
The region’s economy remains
heavily reliant on hydrocarbon The US$1bn Duqm acetic acid
revenues, and its diversification drive plant: BP and Oman Oil Company
has been crucial to the development are conducting a feasibility study
of several multi-billion downstream for building the acetic acid project
FEED CONTRACTORS
projects. There are currently 20 in Duqm. BP hopes the project will
projects with an estimated CAPEX of USUALLY BECOME A be onstream by 2023–24.
US$68bn at pre-EPC stage currently
tracked on EICDataStream. Although
PROJECT’S PMC CONTRACTOR The US$5bn Jubail – SATORP
not all projects currently tracked are Integrated Petrochemical

74
Complex: the FEED is planned to Bahrain
commence in the third quarter of Sitra Refinery - Aromatics Complex
Bahrain Petroleum Company
2018.
Kuwait
Al Zour Petrochemical Complex - Aromatics II
The US$20bn Yanbu crude-oil- Kuwait Integrated Petrochemical Industries Company (KIPIC)
to-chemicals plant by Saudi Al Zour Petrochemical Complex - Facility Integration Project
Aramco and SABIC. KBR has been Kuwait Integrated Petrochemical Industries Company (KIPIC)
selected as the second project Al Zour Petrochemical Complex - Olefins III
management contractor to provide Kuwait Integrated Petrochemical Industries Company (KIPIC)
Pre-FEED, FEED and PMC services Jurassic Field - Early Production Facilities - Phase 2
to develop the complex. Exactly Kuwait Oil Company (KOC)
Qatar
same contract has been awarded
Ras Laffan - New Ethylene Cracker
to Wood in March 2018.
Qatar Petroleum (QP)
Saudi Arabia
ADNOC has ambitious plans to Jubail - AL WAHA Polypropylene Plant Upgrade
invest about US$45bn to expand AL WAHA Petrochemicals Company
its domestic and international Jubail - Rufayah Chemicals - Jubail PlasChem Park - Hydrocarbon Resin Complex
refining, gas processing and Rufayah Chemicals Company (RCC)
petrochemicals business portfolio Jubail - SATORP Integrated Petrochemical Complex
in the next five years. Its US$10bn Saudi Aramco Total Refining & Petrochemical Co. (SATORP)
Borouge 4 complex is expected Ras Al Khair Ammonia Plant III
Saudi Arabian Mining Company (Ma’aden)
to go ahead in doing so tripling the
Sasref - Jubail Refinery - Modernisation and Expansion phase 2
petrochemical production capacity
Saudi Aramco Shell Refinery Company (SASREF)
to 11.4MMtpa by 2025.
Yanbu - Crude Oil-To-Chemicals (COTC) Complex
SABIC (Saudi Basic Industries Corporation)
A FEED contract award is expected United Arab Emirates
for the proposed US$600m Borouge 4
Ruwais refinery complex linear Borouge (Abu Dhabi Polymers Company)
alkyl benzene plant in 2018, which Fujairah Refinery
is being developed by the 50/50 Mubadala Investment Company
ADNOC and Cespa JV. Ruwais Air Separation Unit (ASU) Project
ADNOC Industrial Gas
Ruwais Industrial Complex - Polyolefins Compounding Facility
In addition, OMV signed a
Abu Dhabi National Oil Co. (ADNOC)
memorandum of understanding Ruwais Refinery Complex - Gasoline and Aromatics Project (GAP)
with ADNOC in May 2017 to provide ADNOC Refining
support to ADNOC’s downstream Ruwais Refinery Complex - Linear Alkyl Benzene (LAB) Plant
business. The agreement involves Abu Dhabi National Oil Co. (ADNOC)
cooperation in a number of
areas, including the evaluation
of opportunities in downstream Table 12
projects, the exchange of
Major projects at pre-EPC stage.
knowledge and experience in
refining operations and refinery-
petrochemical integration and future to increase the region’s as Umm Al-Narr) and Fujairah
optimisation, and downstream export competitiveness: e.g. refineries.
technical and maintenance support. Oman’s Mina Al Fahal refinery,
Qatar’s QP refinery, Saudi In terms of contracting activity,
New upgrade projects related to Aramco’s Yanbu refinery, and contractors that bring finance with
CFPs are envisaged in the near the UAE’s Abu Dhabi (also known them are expected to be the most

75
MARKET FOCUS: GCC

successful in the region. Finance Bahrain

plays a vital role when it comes to Sitra Petrochemical Plant Expansion - Urea Plant
awarding major contracts. South JGC (Japan Gasoline Corporation)
Korean, Chinese and Japanese Sitra Refinery - Upgrade
contractors are expected to
JGC (Japan Gasoline Corporation)
continue their success in the region
JV Samsung Engineering, Technip, Técnicas Reunidas
due to the funds they bring with
them, with the support from Asian Kuwait
banks and Asian export credit Mina al-Ahmadi Refinery - Molten Sulphur Handling Facilitiy
agencies. However, western export Gulf Spic Contracting Company WLL
credit agencies are also active in Oman
providing loans to finance projects Duqm Refinery
in the GCC region. In addition to
JV Daewoo Engineering & Construction, Técnicas Reunidas SA
the financial contributions, western
JV Petrofac, Samsung Engineering
contractors also provide expertise
and reliability, as well as ensuring Wood Plc (PMC)
promise and quality. Therefore, the Luban Ammonia Plant (Salalah Ammonia Plant)
JVs between Asian and Western Galfar Engineering & Contracting
contractors are expected to foster SNC-Lavalin
continued success in the region. Salalah Liquefied Petroleum Gas (LPG) Extraction Plant
Petrofac
Future opportunities
Saudi Arabia
FEED contracts have been
awarded for projects listed in Haradh and Hawiyah Gas Increment Program - Hawiyah Gas Plant (HGP)
Expansion
Table 12. Following successful
completion and FID confirmation, Saipem
these projects are expected to Haradh and Hawiyah Gas Increment Program - North, South and Satellite Gas
move into the EPC stage. Compression Plants
Técnicas Reunidas
Engaging as early as possible is a key Jubail United Petrochemical Company (JUPC) Complex - Third Ethylene Glycol Unit
– providing the quotations during the Samsung Engineering
FEED stage increases the changes
Sasref - Jubail Refinery - Modernisation and Expansion
to win the contract as the FEED
CB&I
contractor usually becomes project’s
PMC contractor, supporting the Yasref Clean Fuels Interfacing Facilities Project
EPC contractors with procurement Punj Lloyd
of equipment. In addition, if a United Arab Emirates
project’s schedule is tight, long lead Jebel Ali Condensate Refinery Expansion
equipment is purchased in advance, Overseas Ast
prior to finalising the FID or EPC
Rotary Engineering Ltd.
contract award.
Ruwais Refinery - Residual Fluid Catalytic Cracking (RFCC) Unit - Post Fire
Restoration Project
Although the EPC and PMC
GS E&C
contracts have been awarded,
there are still opportunities for the
supply chain to provide ancillary
equipment as well as engineering Table 13
services to the projects’ major
Projects with opportunities for the supply chain.
contractors detailed in Table 13.

76
APPENDICES
APPENDICES

Project by country Project stage Est. CAPEX US$m

Bahrain 1,500
Sitra Refinery - Aromatics Complex, 2022 FEED 1,500
Bahrain Petroleum Company
Kuwait 12,500
Al Zour Petrochemical Complex - Aromatics II, 2022 Feasibility 5,000
Kuwait Integrated Petrochemical Industries Company (KIPIC)
Al Zour Petrochemical Complex - Facility Integration Project, 2023 FEED 500
Kuwait Integrated Petrochemical Industries Company (KIPIC)
Al Zour Petrochemical Complex - Olefins III, 2022 7,000
Kuwait Integrated Petrochemical Industries Company (KIPIC) Feasibility
Oman 7,000
Duqm Acetic Acid Plant, 2024 Feasibility 1,000
BP, Oman Oil Company
Duqm Petrochemicals Plant, 2023 Feasibility 1,000
Duqm Refinery and Petrochemical Industries Co (DRPIC)
Duqm Refinery - Oman Wanfang, 2022 Feasibility 5,000
Oman Wanfang
Saudi Arabia 47,230
Jeddah Refinery Decommissioning and Convertion To Distribution Center, 2020 Feasibility 250
Saudi Aramco
Jizan (Jazan) Petrochemical Plant - Pan-Asia PET, 2022 Feasibility 3,800
Pan-Asia PET Resin (Guangzhou)
Jubail Chemical Complex - Hydrocarbon Resin Complex, 2022 Feasibility 500
Rufayah Chemicals Company (RCC)
Jubail Pygas and Pyoil Project (Advanced Petrochemical), 2021 Feasibility 580
Advanced Petrochemical Company
Jubail - SATORP Integrated Petrochemical Complex, 2025 Feasibility 5,000
Saudi Aramco Total Refining & Petrochemical Co. (SATORP)
Sibur Petrochemical Plant, 2022 Feasibility 1,100
Sibur
Yanbu Oil-to-Chemicals Plant, 2025 PMC 20,000
SABIC (Saudi Basic Industries Corporation)
United Arab Emirates 11,800
Fujairah Bitumen Refinery - Gulf Petrochem FZC, 2022 200
Gulf Petrochem
Ruwais Air Separation Unit (ASU) Project, 2020 FEED 100
ADNOC Industrial Gas
Ruwais Refinery Complex - Linear Alkyl Benzene (LAB) Plant, 2022 FEED 600
Abu Dhabi National Oil Co. (ADNOC)
Borouge 4, 2023 Pre-FEED 10,000
Borouge (Abu Dhabi Polymers Company)

Appendix 1

Active and future downstream projects in the GCC countries at pre-EPC stage.

78
 Bahrain Saudi Arabia
Bahrain Petroleum Company Saudi Aramco
http://www.net/en-us/procurement/procurement-with-us There are different registration procedures depending
Tatweer Petroleum upon your company’s location and the type of suppliers.
Information at: http://www.saudiaramco.com/en/home/
http://tatweerpetroleum.com/prospective-supplier- suppliers.html
registration
For service providers: https://esr.aramco.com/esr/
Kuwait component/main
Kuwait Integrated Petrochemical Industries Company For material suppliers including vendors and
(KIPIC) manufacturers: https://onboarding.aramco.com/web/
http://kipic.com.kw/e-business.html guest/home
Kuwait National Petroleum Company SABIC
https://esourcing.knpc.com/esop/kuw-kpc-host/public/ https://supplier.sabic.com/RegisterSABICSupplier.aspx
web/login.html https://www.petrorabigh.com/en/Pages/ContactUs.aspx
Kuwait Oil Company Saudi Aramco Shell Refinery Company
https://ebusiness.kockw.com/ http://www.sasref.com.sa/supplier.html
Oman Saudi International Petrochemical Company
Oman Oil Refineries and Petroleum Industries Company http://www.sipchem.com/en/supplier-relationship/
http://www.orpic.om/suppliers/tenders vendor-registration-qualification
Duqm Refinery and Petrochemical Industries Co Yanbu Aramco Sinopec Refining Co
https://duqmrefinery.om/vendor-registration-form/ http://www.yasref.com/business/registration
Oman Oil Company United Arab Emirates
https://www.businessgateways.com/online-registration Abu Dhabi National Oil Company
Salalah Methanol Company https://www.adnoc.ae/en/doing-business-with-us/
http://www.smc.co.om/SitePages/Vendor%20 procurement
Registration.aspx Borouge
Qatar http://borouge.com/Eservices/Pages/EProcurement.aspx
Qatar Petrochemical Company Mubadala Investment Company
http://qapco.com/procurement/new-supplier-registration/ https://esourcing.mubadala.ae/esop/uae-mdc-host/
public/web/login.jst
Qatargas, Ras Laffan (Barzan) Helium Plant
Email: supplier.introduction@qatargas.com.qa Emirates National Oil Company
https://www.enoc.com/en/contractors-and-suppliers/

Appendix 2

GCC project developers and supplier registration links.

79
APPENDICES

Africa 1
Brass Island Fertiliser and Methanol Plant Phase 1
Asia 20
Dongguan Petrochemical Complex
Guru Gobind Singh Refinery Expansion Phase 2 and Petrochemical Complex (Bathinda)
Heze Polyethylene Unit (Shandong Yuhuang Shengshi Chemical)
Mangalore Ammonia Plant Upgrade (Mangalore Chemicals and Fertilizers)
Vizag (Visakhapatnam) Refinery Expansion
Yan'an Refinery Upgrade (Shaanxi Yanchang Petrochemical Group)
Zhoushan (Zhejiang) Refinery and Petrochemical Complex (Phase 1)
Panjin Petrochemicals Complex
Yinchaun Methanol to Olefin (MTO) Plant
Pizhou Petrochemical Plant
Shouguang Bohai Industry Park Polyethylene Unit
Panjin Refinery & Petrochemicals Complex
Panipat Bioethanol Plant
Cilegon Naphtha Cracker Expansion - Phase 2
Shurtan Gas and Chemical Complex Expansion Project
Shymkent Lube Base Oil Plant
Ningbo Petrochemical Complex Expansion (Formosa Chemicals and Fibre Corporation)
Mid-Country Refinery Upgrade (PARCO)
Tianjin Petrochemical Plant
Jinzhou Integrated Refining and Petrochemical Complex
Europe 6
Romania Cellulosic Ethanol Plant (Clariant)
Gothenburg Biofuel Hydrogen Unit
Butachimie Chalampe Adiponitrile (ADN) Plant Expansion
Leopoldov Cellulosic Ethanol Plant
Turpas Refineries New Sulfur Recovery Units
Pulawy Nitric Acid Plant Modernisation
North America 1
Mont Belvieu Isobutane Dehydrogenation (iBDH) Unit

Appendix 3

Projects with technology/licensing contracts awarded in 2017, currently at pre-FEED stage.

80
 Site Country Estimated Developer Start-up
CAPEX (US$m)
Sitra Refinery - Upgrade Bahrain 5,500 Bahrain Petroleum Company 2022
(BAPCO)
Duqm Refinery Oman 6,100 Duqm Refinery and Petrochemical 2023
Industries Co (DRPIC)
Garadagh (North Sangachal) Oil, Gas Azerbaijan 4,200 SOCAR Gas Plastics Company 2022
Processing and Petrochemical Complex (SOCAR GPC)
(OGPC) - Phase I
Tahrir Petrochemicals Complex Egypt 10,600 Tahrir Petrochemicals International 2021
Kakinada Petrochemicals Complex India 5,882 HPCL/Gail India 2020
(HPCL & GAIL)
Sweeny Condensate Splitter & Second USA 1,000 Phillips 66 2020
Fractionator
Yanbu Crude Oil-to-Chemicals Plant Saudi Arabia 20,000 Saudi Aramco/SABIC 2025
Nakhodka Methanol and Fertiliser Plant Russia 6,300 Nakhodka Chemical Group (NCG) 2021
Police Propane Dehydrogenation and Poland 1,160 Zaklady Chemiczne Police (ZChP) 2022
Polypropylene Plant (subsidiary of Grupa Azoty)
Nagapattinam Cauvery Basin Refinery India 4,200 Chennai Petroleum Corporation 2022
Phase 1 (CPCL)
Lake Charles Methanol Plant USA 3,800 Lake Charles Methanol 2022
Kangan Petro Refinery Project Phase 2 Iran 3,210 Kangan Petro-Refining Company 2022
Bayannur Ammonia and Methanol China 500 Inner Mongolia Heimao Coal 2022
Project Chemical
Kamsar Crude Oil Refinery Guinea 100 Brahm Oil Refinery 2021
Kohat Khyber Pakhtunkhwa Refinery Pakistan 200 Khyber Pakhtunkhwa Oil and Gas 2022
Company Limited (KPOGCL)
Nakhodka Far East Refinery and Russia 19,000 Far East Petrochemical Company 2022
Petrochemical Complex (Phase I and II) (FEPCO)
Balikpapan Refinery Expansion and Indonesia 5,300 Pertmina 2022
Upgrade (RDMP)
Amur Gas Chemical Plant Russia 8,700 Sibur 2024
Tianjin Refinery, Petrochemical China 5,000 PetroChina-Rosneft Orient 2022
Complex and Storage Facility Petrochemical (Tianjin) Co. Ltd.
Balongan Petrochemical Complex Indonesia 8,000 PTTGC/Pertamina 2022
(PTTGC & Pertamina)
Port Arthur Ethane Cracker USA 1,700 Total/Borealis/NOVA Chemicals 2020
Sebastopol Refinery Colombia 3,000 Refeneria Colombiana Sebastopol 2021
S.A.
Belmont County Ethane Cracker USA 7,500 PTTGC/Daelim 2021
Rijeka Refinery Residue Upgrade Croatia 400 Ina Industrija Nafte DD 2021
Program
York Potash Project England 2600 York Potash Ltd 2021

Appendix 4

Major projects with FIDs expected in 2018–20 (continued overleaf).

81
APPENDICES

Site Country Estimated Developer Start-up

CAPEX (US$m)
Alberta Propane Dehydrogenation and Canada 3,200 Canada Kuwait Petrochemical 2021
Polypropylene Plant (Pembina) Corporation
Kallo Propane Dehydrogenation (PDH) Belgium 1,000 Borealis 2022
Plant
Pietarsaari (Jakobstad) Bioethanol Plant Finland 50 North European Oil Trade 2020
Kajaani Biorefinery Expansion Finland 50 North European Oil Trade 2020
Gulf Coast Growth Ventures Project USA 7,300 ExxonMobil/SABIC 2022
(GCGV) - San Patricio PetChem Facility
Jurong Island S-SBR Plant Expansion Singapore 50 Asahi Kasei Chemical Corp. 2019
Izmir Petrochemical Complex Turkey 3,000 Socar Turkey Enerji A.S 2023
Gothenburg Biofuel Hydrogen Unit Sweden 47 St1 Biofuels 2020
Sriracha Refinery Expansion - Clean Thailand 3,700 Thai Oil 2021
Fuel Project
Changzhi Gas-to-Liquids (GTL) Plant China 500 Air Products Lu.an (Changzhi) Co 2021
Belgium Polypropylene Plants Belgium 200 Borealis 2020
Expansions (Borealis)
Maharashtra Grassroots Refinery and India 44,000 IOC/HPCL/BPCL/Saudi Aramco 2025
Petrochemical Complex
Rotterdam Waste-to-Chemicals Plant Netherlands 250 AkzoNobel/Enerkem/Air Liquide/ 2021
Rotterdm Port`
Long Son Petrochemical Complex Vietnam 5,400 Long Son Petrochemical Co 2022

Appendix 5 ➤

Top 25 projects to keep an eye on in 2018.

82
Project name Country Operator Project Estimated Start-
stage CAPEX (US$m) up year
Hassi Messaoud New Refinery Algeria Sonatra EPC 2,500 2020
Sitra Refinery - Aromatics Complex Bahrain Bahrain Petroleum FEED 1,500 2020
Company (BAPCO)
Kallo Propane Dehydrogenation (PDH) Belgium Borealis FEED 1,000 2022
Plant
Europe Propane Dehydrogenation Plant Belgium INEOS Feasibility 1,000 2021
(INEOS)
Alberta Propane Dehydrogenation and Canada Canada Kuwait FEED 3,200 2021
Polypropylene Plant (Pembina) Petrochemical Corporation
Zhoushan (Zhejiang) Refinery and China Zhejiang Petroleum and Multi- 25,440 2020
Petrochemical Complex (Phase 1) Chemical Company Contract
MOL Polyols Project Hungary MOL Group FEED 1,016 2021
Guru Gobind Singh Refinery Expansion India HPCL-Mittal Energy Ltd Feasibility 4,000 2021
Phase 2 and Petrochemical Complex (HMEL)
(Bathinda)
Tuban Refinery and Petrochemical Indonesia PT Pertamina Rosneft FEED 15,000 2024
Complex (Pertamina) Pengolahan dan Petrokimia
Pertamina Bontang Refinery Indonesia Pertamina Feasibility 10,000 2025
Balongan Petrochemical Complex Indonesia PTT Global Chemical Feasibility 8,000 2022
(PTTGC & Pertamina) (PTTGC)
Cilacap Refinery Expansion and Indonesia Pertamina FEED 5,500 2023
Upgrade (RDMP)
Balikpapan Refinery Expansion and Indonesia Pertamina FEED 5,300 2020
Upgrade (RDMP)
Balongan Refinery Expansion and Indonesia Pertamina FEED 1,200 2020
Upgrade (RDMP-RU VI)
Assaluyeh - 12th Olefin And Aromatics - Iran Kian Petrochemical FEED 4,250 2023
Kian Petrochemical Company
Al Zour Petrochemical Complex - Kuwait Kuwait Integrated Feasibility 7,000 2022
Olefins III Petrochemical Industries
Company (KIPIC)
Al Zour Petrochemical Complex - Kuwait Kuwait Integrated Feasibility 5,000 2022
Aromatics II Petrochemical Industries
Company (KIPIC)
Amur Gas Chemical Plant Russia Sibur FEED 7,000 2024
Yanbu Crude Oil-to-Chemicals Plant Saudi SABIC/Saudi Aramco PMC 20,000 2025
Arabia
Izmir Petrochemical Complex Turkey SOCAR Turkey Enerji A.S Pre-FEED 3,000 2023
Hoima Refinery Uganda Government of Uganda FEED 3,000 2022
Borouge 4 United Arab Borouge (Abu Dhabi Pre-FEED 10,000 2023
Emirates Polymers Company)
St. James Petrochemical Complex USA Formosa Plastics Feasibility 9,400 2021
(Formosa) - Phase I Corporation
Gulf Coast Growth Ventures Project USA ExxonMobil /SABIC EPC 7,300 2022
(GCGV) - San Patricio PetChem Facility
Jubail - SATORP Integrated Saudi SATORP FEED 5,000 2025
Petrochemical Complex Arabia

83
About the EIC

Established in 1943, the EIC is the leading trade association for

companies working in the global energy industries. Our member
companies, who supply goods and services across the oil and
gas, power, nuclear and renewable sectors, have the experience
and expertise that operators and contractors require.

As a not-for-profit organisation with offices in key international

locations, the EIC’s role is to help members maximise commercial
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The services we offer play an important part in supporting

over 600 member companies to do business in a competitive
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EICDataStream

Our projects database, EICDataStream, provides extensive

information on almost 7,500 global active and future projects
in all energy sectors worth US$10tn. By tracking the full project
lifecycle from feasibility to construction and then completion, it
helps members to identify opportunities and plan their business
development strategies.

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The only operations and maintenance database to map all major

UK energy assets across all sectors, EICAssetMap puts the details
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who you need to do business with at each site.

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