Shell, Total strike Saudi gas deal

The Royal Dutch/Shell Group of Companies and Total signed an agreement with the Government of the Kingdom of Saudi Arabia, to form a Joint Venture with Saudi Aramco for the exploration of gas in an area of 200,000 km2 in the southern part of the Rub Al-Khali (the Empty Quarter).

Shell, as leader of the Consortium, will retain a participation of 40 per cent of the new Joint Venture, with Saudi Aramco and Total each 30 per cent participation.

Jeroen van der Veer, President of Royal Dutch and Vice Chairman of the Royal Dutch/Shell Group of Companies, representing the Consortium, met today with His Excellency Ali bin Ibrahim Al-Naimi, Minister of Petroleum and Mineral Resources of the Kingdom of Saudi Arabia, to finalise the agreement.

Mr van der Veer was accompanied by Mr. Alain Lechevalier, Vice President Middle East, Exploration & Production of Total.

Mr van der Veer commented:
gThis agreement is an important breakthrough as it heralds the first time after the creation of Saudi Aramco that foreign International Oil Companies have gained access to gas acreage in the Kingdom of Saudi Arabia, holder of the worldfs largest reserves of oil and gas. Shell, on behalf of the Consortium, is naturally proud to be part of this historic moment.h

2004/4 Shell@

Shell and Saudi Aramco join Total in the South rub Al Khali Company

"Saudi Aramco is truly proud of its relationship with shell, and that cuts across the whole business," says Khalid Al-Falih, Vice President of New Business Development at Saudi Aramco Chairman of the new South Rub Al Khali Company Limited (SRAK).

He notes that SRAK is only the latest chapter in an ongoing story of co-operation between the two companies. "The relationship between Shell and Saudi Aramco is one of the strongest partnership that Saudi Aramco has with an international oil compant [IOC]," he says. "This relationship has its foundations in two joint ventures: the Saudi Aramco Shell Refinery Company [Sasref] in Jubail on the east coast of Saudi Arabia, and in Motiva, the retail fuels joint venture in the United States.

"The Kingdom's Natural Gas Initiative and the South Rub Al Khali Company, which brings together Saudi Aramco, Shell and Total, will build on that strength," he adds.

Central to the genesis of SRAK was Saudi Arabia's desire to attract more foreign direct investment and increase the reserves of natural gas available to the nation's burgeoning industrial and utilities sectors. "The kingdom of Saudi Arabia indicated its desire to increase investment opportunities in the country with the announcement of the three Core Ventures," says Khalid Al-Falih. "This initiative was an attempt to find areas of overlap between the IOC's expressed areas of interest and the development needs of the Kingdom, and was to span both upstream and downstream operations.

"Shell was in the vanguard of the Natural Gas Initiative, and following the signing of the preparatory agreements in 2001, we began working with the signatories to tailor development programmes that would prove mutually beneficial to both the Kingdom and the IOCs. Unfortunately, it became clear that these Core Ventures as originally conceived were too commercially and technically complex, and that it would not be feasible to implement their downstream elements," he says.

"The result was that, in consultation with the IOC consortium led by Shell, the Saudi Government restructured Core Venture 3 to focus on the upstream," he continues. "This resulted in the signing last year of a contracted for the exploration and development of 210,000 square kilometers of the Rub Al Khali desert and the formation of the South Rub Al-Khali joint venture."

As a result of his close involvement in the gas development programme, Khalid Al-Falih has a thorough understanding of the joint venture and its operating mandate. "I was seconded from Saudi Aramco to the Government's negotiating team for the Natural Gas Initiative for two years, and was very proud when we concluded the agreement with Shell, Total Saudi Aramco," he says.

The Saudi Aramco executive is also well acquainted with larger context in which SRAK will operate, having helped to formulate the Kingdom's gas strategy during his stint with Saudi Aramco's Corporate Planning organisation. "The ultimate objective of the joint venture is to find gas and produce it at the lowest cost for the Kingdom," he explains. "Ours is a growing economy, and maintaining a reliable, affordable supply of natural gas to industries and utilities is vital for continued growth. SRAK, along with Saudi Aramco's own gas development projects and the creation of other joint venture companies in the gas sector, will provide the energy needed for sustained expansion."

The new company itself has been designed to maximise the value that each partner provides to the joint venture, he emphasizes. "Shell has undertaken the leadership role in SRAK, which will be able to capitalize on the experience and knowledge of two of the world's leading IOCs as well as the world's leading national oil company, Saudi Aramco. All three companies bring to the joint venture their business competencies and considerable expertise," he says.

It's a formula in which the total is greater than the sum of its parts, according to Khalid Al-Falih. "Saudi Aramco has a great deal of experience with the Kingdom's geology and reservoirs, as well as its own proprietary technologies. It also understands local business and logistical considerations. At the same time, we are looking forward to having Shell and Total bring their technology to bear on the project. In addition, rather than having a single operator, we have chosen a model which will allow all the three companies to share in the operations of SRAK by having staff from each firm seconded to the joint venture."

He notes that Shell will assume point position in the joint venture. "Shell procedures will be used in the exploration phase, and we are looking forward to the success of this venture under Shell's leadership. To date, Saudi Aramco has been happy to have Shell apply it operating systems in both Sasref and Motiva, and I am sure that we will work well with Shell in the joint venture," he says.

Integrating SRAK's operations into the Kingdom's existing gas infrastructure provides both a challenge and an opportunity, he remarks. "We will be working hard to ensure that there is a real synergy between the joint venture and Saudi Aramco's existing operations to ensure the safe and successful delivery into Saudi Aramco's Master Gas System of the gas which will be found in the Rub Al Khali.

"The challenges ahead will not be easy," he concludes. "We are a newly born company, but we must run from the start and cannot afford to crawl. However, this joint venture brings together three companies known for their ability to meet challenges head-on and to master difficult operating environments, like the Rub Al Khali. As a result, I believe that the joint venture will be bringing in results and producing gas very soon and that these results will please everyone concerned."


The South Rub Al Khali Company Limited (SRAK) was formed in December 2003 with three shareholders: Shell with 40 per cent and Saudi Aramco and Total, each with a 30 per cent shareholding. SRAK was established to explore and develop the natural gas and associated liquids in a 210,000 square kilometre concession in the Kingdom of Saudi Arabia's South Rub Al Khali (Empty Quarter) - an area five times the size of Holland, the same size as the UK or equivalent to 1,000 North Sea exploration blocks.

2004/3/7 AP

Foreign firms move into Saudi

In a milestone agreement, Saudi Arabian officials signed contracts with foreign oil executives on Sunday to explore jointly for natural gas in the country's vast southern desert known as the Rub al-Khali, or Empty Quarter.
Saudi Arabia boasts the world's fourth-largest deposits of gas, but the government had never before invited foreigners to make competitive bids for rights to explore for this resource. The four winning companies, including two from Russia and China, said they expected to invest several billion dollars to develop any gas they might discover.

US firms were conspicuous for their absence among the winners of these landmark deals. However, Saudi Oil Minister Ali Naimi played down any significance in that regard and instead stressed the advantages of working with a mixed group of what essentially are second-tier energy companies.

"We actually chose the best bidders, and we are in fact very pleased at this diversification," he told a news conference at a government conference center in Riyadh.

Saudi Aramco, the state-run oil concern, took a 20% share in each of the three contracts awarded. Its partners are Lukoil Holdings of Russia; China Petroleum & Chemical Corp., or Sinopec; and a consortium comprising Italy's Eni SpA and Repsol-YPF of Spain.

Although Saudi Aramco announced the awards in late January, the deals did not become official until now. The contracts are to last for 40 years, with exploratory surveys and drilling to begin immediately.

Saudi Arabia wants to use its undeveloped gas as fuel for an ambitious range of planned industries, including plants to treat and desalinate water and factories to make petrochemicals, steel and cement.

Saudi Arabia began opening up its gas industry to foreigners after abandoning in 2002 the so-called Saudi Gas Initiative, a huge and unwieldy investment scheme that would have coupled upstream gas exploration and production with downstream petrochemicals and utilities. In a much more modest deal last summer, Royal Dutch/Shell and Total won rights to explore for gas in an area of the eastern Rub al-Khali.

The Oil Ministry offered up for auction three areas in the northern Rub al-Khali in July. Although 41 companies expressed interest, only six placed bids, and of these only one - ChevronTexaco Corp. - was American. It placed second in the bidding for all three contracts.

Russia is Saudi Arabia's main rival as an oil producer, and the Saudis have had little success so far in winning its cooperation for Opec's policy of keeping crude supplies tight and prices high. Saudi Arabia, with the world's largest oil reserves, is the most powerful member of the Organisation of Petroleum Exporting Countries.

China, meanwhile, is a major buyer of Saudi crude. Its rapid economic growth will make it a still bigger market in the future.

Saudi Arabia hopes to build closer ties with both countries.


May 18, 2001 Exxon Mobil

ExxonMobil Selected as Leader in Saudi Gas Venture

Exxon Mobil Corporation announced today that the Kingdom of Saudi Arabia has selected ExxonMobil as the leader in a significant project, Core Venture 2 in the Saudi Arabian Natural Gas Initiative, and that ExxonMobil has also been selected to participate in the implementation of another major project, Core Venture 1.

The two projects, known as
Core Ventures 1 (Northern Rub' al Khali) and 2 (Red Sea) could result in a total estimated industry investment of over US$20 billion and are designed to underpin the Kingdom's goals of economic growth and job creation by developing and providing energy to diverse industries.

Exxon Mobil Corporation Chairman Lee Raymond said, "We are very pleased to have been selected by the Kingdom of Saudi Arabia to lead Core Venture 2, participate in Core Venture 1 and are hopeful that we will also be selected to lead Core Venture 1. We look forward to building on our successful working relationship with the Government of Saudi Arabia to realize the Kingdom's objectives of maximizing the economic and social benefits from its natural gas resources through partnership with the International Energy Industry."

As a result of the announcement,
ExxonMobil will become the lead, majority participant in Core Venture 2 and a significant participant in Core Venture 1. Following the signing of Preparatory Agreements, ExxonMobil will work with the Saudi Government and other participants to define and evaluate each Core Venture element, and develop project execution plans.

Core Venture 1 will significantly expand the Kingdom of Saudi Arabia's power, water desalination, petrochemical and gas system and provide for exploration and development of the Kingdom's gas resources in the Northern Rub' Al-Khali region. The project includes field production and gathering facilities, gas processing and fractionation plants to recover and separate liquids from existing and new gas production, gas and liquids transmission and downstream investment in power, petrochemicals and water desalination. The project includes up to 4000 MW new power generation capacity integrated with water desalination, and two new petrochemical facilities, one each on the east and west coasts of Saudi Arabia.

Core Venture 2 includes development of discovered gas resources in Northwest Saudi Arabia, power and desalination facilities in that region and exploration in the Northern Red Sea with the opportunity for additional investment in chemicals, power and desalination facilities on the West Coast depending on exploration success.

"ExxonMobil has a strong track record of bringing large scale projects on-stream in a safe, cost effective and timely manner," said Raymond. "We will put this expertise to work, combined with proprietary, leading edge technology, to ensure that the people of the Kingdom of Saudi Arabia and our shareholders benefit from this Initiative."

ExxonMobil has invested more than $5 billion in Saudi Arabia and is the largest foreign investor in the Kingdom. The company is also the largest foreign purchaser of crude oil and other hydrocarbons from Saudi Aramco. Existing projects include two petrochemical joint ventures with Sabic, Yanpet and Kemya, and the Samref refinery -- a joint venture with Saudi Aramco.

Joint ventures in which ExxonMobil has interests (in Saudi Arabia) currently employ more than 3,200 Saudi nationals. The hiring and training of Saudi nationals will continue to be a key component of ExxonMobil's project leadership strategy. ExxonMobil will actively seek to recruit qualified Saudi employees from universities and technical institutions throughout the Kingdom.

Raymond concluded, "ExxonMobil has had a significant presence in Saudi Arabia for over half a century and we're looking forward to many more years of continued success. We believe this investment opportunity complements our existing portfolio in the region and positions us well in this strategically important part of the world."

Exxon Mobil Corporation is the world's premier petroleum and petrochemical company. The company has subsidiaries or operations in about 200 countries and territories worldwide.


Gulf News 2003/7/6

New Saudi gas initiatives need to be attractive

Saudi Arabia's original Natural Gas Initiative (NGI) had been all but totally terminated due to differences between international oil companies (IOCs) and the government. The authorities reportedly intend to make a new revised offer during a meeting in London later this month.

Crown Prince Abdullah revealed the gas initiative in 1998 during a visit to the U.S. Total initial investments were projected around $25 billion in the first ten years covering upstream, midstream and downstream projects.

The integrated programme stipulated
exploration and processing of gas plus construction of power stations, water desalination plants and petrochemical schemes. The gas sector was excluded from a negative list that specifies activities prohibiting foreign investments.

In June 2001, the government granted a group of IOCs from the U.S. and Europe exclusive rights to explore and process gas in three core ventures across the kingdom.

ExxonMobile led venture one, known as South Ghawar, requiring investments of up to $15 billion. Likewise, the American corporation led core venture two in the Red Sea area, which required outlay of nearly $5 billion all while Royal Dutch/Shell controlled venture three in the Shaybah region, requiring fund of $5 billion.

From the onset, the NGI looked complicated in many respects. Despite several rounds of negotiations, the two sides could not agree on a course of action leading to implementation agreements.
At the core of the disagreement was the internal rate of return (IRR).

The IOCs insisted on solid profitability from the gas development as well as from the required ancillary power and water desalination plants and petrochemicals projects.

While not looking for commercial gains, the Saudi government wanted to seal a deal that would not appear to be wasting natural resources. Riyadh had reportedly offered between 10 to 12 per cent return while the IOCs were demanding around 18 to 20 per cent.

Other restrictions made the gas ventures even less attractive. For example, the offer was
valid only for areas of non-associated gas.

Additionally, areas with proven gas reserves were off limits. Also, the two sides disagreed on the interpretation of the seismic surveys. Saudi Aramco, which represented the government, had estimated the three areas to contain 35 trillion cubic feet of gas.

But the IOCs believe only 20 per cent of that is recoverable for commercial purposes. Hence, the IOCs felt that the proposed gas acreages were inadequate. To be sure, Saudi Arabia has substantial gas reserves, nearly 230 billion cubic feet.

Also, political developments proved detrimental for American firms to commit major investments in Saudi Arabia. Some experts believe that the September 11th terrorist attacks in the US had complicated matters not least because 15 of 19 hijackers were Saudi nationals.

In January and as part of moves to avoid collapse of the entire deal, t
he government terminated the second core venture, considered the most difficult to explore. But in early June, the first core venture, the most prized was terminated. Thus, progress on the third core venture, regarded as the easiest of all, remained valid.

The NGI formed the flagship of crown prince Abdullahs economic reforms programme and its near collapse could undermine the entire efforts.

The push to open up the economy, as stipulated in the five-year plan extending to 2005, is partly aimed at reducing dependence on oil, which constitutes nearly 75 per cent of income, 85 per cent of exports and 35 per cent of the GDP.

Among others, the government had sought foreign investments in order to boost economic infrastructure and provide employment opportunities for locals. However, in order to reach fruition, any new gas offer needs to be attractive enough to the IOCs.

2008/5/14 Saudi Aramco

Saudi Aramco and Total confirm Jubail Refinery Project

The Saudi Arabian Oil Company (Saudi Aramco) and Total have both confirmed their decision to invest in a
400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia.

The refinery will process Arabian Heavy crude to high-quality refined products that will meet the most stringent global product specifications and is expected to begin operations at the end of 2012. The refinery will benefit from the proximity to the Arabian Heavy crude supply system and from the excellent facilities of the Jubail industrial city such as King Fahad Industrial Port, power and water grids and residential area.

gAt Saudi Aramco we are pleased to announce our commitment to strengthen our strategic partnership with Total by moving forward with the Jubail export refinery project. Our vision of this world-class refinery is to further expand the Kingdomfs refining and petrochemical infrastructure and create job opportunities here at home. This facility will provide our customers, both domestic and international, with high quality fuels and petrochemicalsh, Khalid G. Al-Buainain, Saudi Aramco Senior Vice President of Refining Marketing and International said.

gLaunching this project is a major achievement, enabling Total and Saudi Aramco to build a strong strategic partnership. By developing this world-class project in Jubail, Saudi Aramco and Total will contribute to supply growing demand for transportation fuels and petrochemicals, especially in Asia and the Middle-East, but also in Europe where the deficit of diesel is growingh, declared Michel Benezit, President of Total Refining and Marketing.

In a comprehensive, joint Front-End Engineering and Design (FEED) study launched in May 2006, Saudi Aramco and Total have selected state- of- the- art proven technologies for a full conversion refinery scheme geared to maximizing the production of diesel and jet fuels. In addition, the project will produce
700,000 tonnes per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer grade propylene.

A joint venture company for the refinery will be formed during the third quarter of 2008.
Saudi Aramco will initially own 62.5% of the company and Total will own the remaining 37.5%. Subject to required regulatory approvals, the parties are planning to offer 25% of the company to the Saudi public while the two founding shareholders each intend to retain a 37.5% ownership interest. Saudi Aramco and Total will share the marketing of the refineryfs production.

Saudi Aramco and Total are planning to release invitations-to-bid for the project
fs construction in June 2008 with a view to awarding all packages during the first quarter of 2009. Orders for long-lead items will be placed as soon as the third quarter of 2008. The project will be introduced to the lending community in the second part of 2008 with a targeted financial close in early 2009.

May 16, 2008 Saudi Aramco

Saudi Aramco and ConocoPhillips Confirm Yanbu Export Refinery Project

The Saudi Arabian Oil Company (Saudi Aramco) and ConocoPhillips today announced they have approved continued funding for the development of the Yanbu Export Refinery Project.

The Saudi Aramco and ConocoPhillips project would construct a grassroots,
400,000 barrel-per-day, full-conversion refinery in the Yanbu Industrial City, in The Kingdom of Saudi Arabia. The refinery is being designed to process Arabian heavy crude which would be supplied by Saudi Aramco. The refinery would produce high-quality, ultra-low sulfur refined products that will meet current and future product specifications. Saudi Aramco and ConocoPhillips would each be responsible for marketing one half of the refinery's production. The refinery is targeted to start up in 2013.

The companies have completed the initial evaluation and front end engineering and design (FEED) outlined in the May 2006 Memorandum of Understanding (MOU). The next phase will include the solicitation of bids, commitment of long lead items and site preparation work.

gWefre pleased to be entering the next stage of development for the Yanbu export refinery project, together with our partner, ConocoPhillips,h said Khalid G. Al-Buainain, Saudi Aramco senior vice president for Refining, Marketing & International. gThis facility will bolster the Kingdomfs refining capacity, and provide additional quantities of high quality refined products for global and domestic markets. This partnership is important to Saudi Aramco, and this initiative is an important aspect of our companyfs expanding downstream business portfolio,h he added.

gConocoPhillips is pleased to continue working with Saudi Aramco towards adding needed capacity to the international refining system,h said Jim Gallogly, ConocoPhillips executive vice president of refining, marketing, and transportation. gThe Yanbu project fits well with the companyfs overall strategy to invest in projects that expand our global refining presence and provide significant new supplies of clean products in an environmentally sound manner.h

ConocoPhillips and Saudi Aramco are planning to form a joint-venture company, with equal interests to own and operate the proposed new refinery. Subject to required regulatory approvals, the parties plan to offer an interest in the refinery to the Saudi public.

ConocoPhillips is an integrated international energy company with interests around the world. For more information, go to www.conocophillips.com.

Owned by the Saudi Arabian Government, Saudi Aramco is a fully-integrated, global petroleum enterprise, and a world leader in exploration and producing, refining, distribution, shipping and marketing. The company manages proven reserves of 260 billion barrels of oil, the largest of any company in the world, and manages the fourth-largest gas reserves in the world.


May 25, 2008 Reuters

Saudi Aramco eyes $129 bln investment in next 5 yrs

State oil giant Saudi Aramco plans to invest
$129 billion on new energy projects in the next five years, the company's executive vice president of operations said on Sunday.

Saudi Arabia is the world's largest oil exporter and Aramco is expanding to increase crude, gas, refining and petrochemical capacity.

$70 billion of the total would be spent by international and domestic joint ventures, and the remaining $59 billion on projects solely undertaken by Aramco, Khalid al-Falih told Reuters.

The $129 billion figure is nearly $40 billion higher that previous estimates given by Saudi official for expansion.

"We are updating our figures all of the time. This figure includes more projects," Falih said. This includes
refinery projects in the United States and China, a second phase of the Saudi-based PetroRabigh 2380.SE, and a giant petrochemical plant at Ras Tanura to be built by Dow Chemical.

Total investment would be higher as it would include some of the $65 billion that Aramco is investing in projects that are already under way.

"We are clearly focused on the downstream as the area of greatest potential for future growth and impact," he said earlier in a speech to a conference.

Movements in crude oil prices and the physical market are disconnected due to oil's increased use as a financial instrument by investors, Falih said.

"Buyers and sellers (are) taking their cues not just from production numbers, demand projections and inventory levels, but from a whole host of factors which lie beyond the realm of the petroleum industry itself," he said.

High energy prices were attracting investment in new and alternative energy supplies, creating "significant uncertainty about the outlook of future demand for petroleum products," he said.

Saudi Oil Minister Ali al-Naimi said last month that, because of falling projections for future demand, the kingdom had no plans to further boost output capacity after it completes it current expansion program.

Aramco's oil output capacity would reach 12 million barrels per day by the end of 2009, Falih said.

Aramco capacity does not include production from the Neutral Zone between Saudia Arabia and Kuwait. Including the zone, Saudi Arabia is aiming to reach a total crude capacity of 12.5 million bpds.

Refining margins are expected to fall over the next several years due to increased capacity and a economic slowdown in key markets, Falih said.

2008/7/12 Saudi Aramco

Accord Inked with SABIC for Marketing Polyolefin Products of Fujian Joint Venture

Sino Saudi Aramco Company Ltd, a wholly owned subsidiary of Saudi Aramco, signed a mutual cooperation agreement with SABIC Shenzhen Trading Company Ltd, a SABIC subsidiary in the People
fs Republic of China.

The agreement was signed on the afternoon of Saturday, July 12, 2008, at the offices of the parent company, Saudi Aramco, in Dhahran.

Under this agreement,
SABIC Shenzhen Trading Company Ltd will market Saudi Aramco Sino Company Ltdfs 25 percent share of polyolefin products produced by the Fujian Refining and Petrochemicals Company of the Peoplefs Republic of China.

The agreement was signed on behalf of Saudi Aramco Sino Company Ltd., by Saudi Aramco
fs senior vice president, Refining, Marketing and International, Khalid G. Buainain, while signing on behalf of SABIC Shenzhen Trading Company Ltd was SABICfs vice president, Corporate Finance, Mutlaq Al-Morished.

The signing ceremony was attended by Saudi Aramco president and CEO Abdallah S. Jum
eah, by Mohamed Al-Mady, SABIC's vice chairman of the Board of Directors and chief executive officer, in addition to a number of senior officials of Saudi Aramco, SABIC and Saudi Aramco Sino Company Ltd.

eah remarked: gLast year, we celebrated with Sinopec, the government of Fujian district of China, and ExxonMobil, the official inauguration of our joint processing venture in Fujian, the "Fujian Refining and Petrochemicals Company Ltd," which is considered to be the first-ever refining and petrochemical industries integrated project to be established with a foreign company in China, and here we are today ready to harvest the fruit of this new investment with our partners, through this momentous step we are taking together with SABIC.h

Jumeah added, gIn itself, this agreement constitutes, from the Kingdom's perspective, an extra relative advantage for SABIC, which grants it the right to market polyolefins in support of Saudi investments abroad.h

Jumeah concluded his statement by saying, gWe believe this cooperation between Saudi Aramco and SABIC will, in the future, add value to the Kingdom's internal and external investments.h

In turn, SABICfs vice chairman and CEO Mohamed Al-Mady said, hThe agreement signed between Saudi Aramco and SABIC is a qualitative leap in the history of Saudi industrial development. The agreement incarnates the integration between two giants each occupying a pioneering position worldwide, the first in the field of oil industries and the other in the area of the petrochemical industry.h

He added; gI look forward to this agreement to serve as a launching pad for more extensive strategic cooperation between the two companies. SABIC has anchored its success over the years on its close cooperation with Saudi Aramco. We are looking forward to promoting this cooperation to include various industrial, marketing and technological aspects in a way that will accelerate national industrial development and maximize the gross domestic product.h

Khalid G. Buainain explained that the marketing studies, conducted by Sino Saudi Aramco Company Ltd, showed that the distribution and marketing of the polyolefins production of Fujian Refining and Petrochemicals Company would cover a large base of customers inside China.

The two parties agreed that this task should be undertaken by SABIC through a polyolefins marketing agreement, on account of SABIC
fs local and foreign experience in petrochemical marketing.

He added:
gThis agreement will underscore the depth of the cooperation between Saudi Aramco and SABIC to maximize the benefit of their investment projects in the best interest of the Saudi economy. Saudi Aramco's share in the products to be marketed by SABIC will amount to 320,000 tons annually, representing percent of the total production of the joint venture in China. Implementation of the agreement is expected to start with the commercial startup of the project in the second quarter of 2009.h

This agreement is regarded as one of the significant pillars in the progress of the strategic partnership between SABIC and Saudi Aramco, and the agreement is expected to boost and support the strong leading position of SABIC in the field of production and marketing of polyolefins, worldwide.

Through its representative, Saudi Aramco Sino Company Ltd, Saudi Aramco holds a 25 percent interest in the refining and petrochemical joint venture along with Fujian Petrochemicals Company of China, a subsidiary of Sinopec Corporation and the Fujian Government, which owns a 50 percent stake, while ExxonMobil owns 25 percent through a subsidiary.

The project
fs products will include such polyolefins as Liner low density polyethylene (LLDPE), at a production capability of 400,000 tons annually, high density polyethylene (HDPE), at a production capacity of 400,000 tons annually. The project will also produce polypropylene (PP), at a production capacity of 470,000 tons annually.

Headquartered in Riyadh, SABIC was founded in 1976 when the Saudi Arabian Government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers and fertilizers.

The Saudi Arabian Government owns 70 percent of SABIC shares with the remaining 30 percent held by private investors in Saudi Arabia and other Gulf Cooperation Council countries.

Saudi Basic Industries Corporation (SABIC) is the world
fs 5th largest petrochemicals company. The company is among the worldfs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

In Saudi Arabia, the company has 20 world-scale complexes and 19 of them are located in the industrial cities of Al-Jubail and Yanbu. Some of these complexes are operated with multinational joint venture partners such as ExxonMobil, Shell and Mitsubishi Chemicals.

Elsewhere, SABIC manufactures on a global scale in more than 45 countries in the Americas, Europe and Asia Pacific. SABIC
fs overall production has increased from 27 million metric tons in 2001 to 55 million metric tons in 2007.

June 16, 2009 

Saudi Aramco and Total Award EPC Contracts for Jubail Export Refinery

Saudi Aramco Total Refining and Petrochemical Company (SATORP) finalized the awarding plan for  Engineering, Procurement and Construction (EPC) contracts that constitute  the thirteen different process packages of their Jubail joint venture refinery, following a meeting of the SATORP Board of Directors. The awarding of these contracts marks an important step in the execution of this 400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia, which plans to be fully operational by the second half of 2013.

When completed, the export refinery will be one of the most advanced refineries in the world and will process Arabian Heavy crude to products fulfilling the most stringent specifications, to meet rising demand for environmentally-friendly fuels. A portion of Jubail refineryfs production will be consumed locally to meet spikes in domestic demand. In-Kingdom refineries, such as the Jubail joint venture, have the location advantage to effectively and efficiently supply both international and domestic demand.

The full-conversion refinery will maximize production of diesel and jet fuels, and will also produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer-grade propylene.

gToday we are marking a major milestone in our partnership with Total, which has been strong historically but is now stronger than ever,h said Khalid Al-Falih, President and CEO of Saudi Aramco. gThe Jubail Export Refinery is a strategic project for Saudi Aramco and the Kingdom of Saudi Arabia, and its timely implementation will ensure that global and regional markets will be well supplied with high quality products in the next decade. Our commitment to fund a project of this scale demonstrates our confidence that energy markets will grow in the years to come, and our confidence that the Kingdom is the ideal location for energy investments by global investors.h

gI am delighted that we have decided to launch the development of the Jubail refinery project with Saudi Aramco,h said Christophe de Margerie, Chief Executive Officer of Total. gToday, we have passed an important milestone, which shows the quality of the strategic partnership between our two companies and their determination to bring off such a far-reaching project, even in a weaker economic environment. As a result, we will be able to meet, from 2013, the increasing demand for high-quality refined products from Asia and the Middle East.h

The synergies between Saudi Aramco and Total lie in the fact that both companies bring knowledge and expertise to the joint venture company. Saudi Aramcofs crude oil supply is located near Jubail, a world-class industrial area, while Total is an international oil company with a fully integrated value chain and a global presence.

The project adds value to the local economy through job creation and opportunities for further downstream investments by local businessmen. It is estimated that the refinery will create approximately 1,200 direct employment opportunities in the Kingdom, each of which typically creates five to six indirect job opportunities.

On May 6 and May 8, 2008, respectively, the Executive Committee of Total and the Board of Directors of Saudi Aramco decided to launch the project, and on June 22, 2008, a eShareholder Agreementf was signed in Jiddah, Saudi Arabia, by Saudi Aramco and Total S.A.

Following the signing of the agreement, SATORP was formed during the third quarter of 2008, and the project remains on schedule. Saudi Aramco and Total will ultimately own 37.5 percent of the company each. Subject to required regulatory approvals, Saudi Aramco plans to offer 25 percent of the company to the Saudi public in an Initial Public Offer (IPO) during the last quarter of 2010.