Aramco JV to develop major refinery and petrochemical complex in China

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Aramco has taken the final investment decision to participate in the development of a major integrated refinery and petrochemical complex in Northeast China. Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group, will develop the liquids-to-chemicals complex.

The decision, which is subject to finalization of transaction documentation, regulatory approvals and closing conditions, follows the establishment of HAPCO in December 2019 between the three partners. The project, which presents an opportunity for Aramco to supply up to 210,000 barrels per day of crude oil feedstock to the complex, is expected to be operational in 2024.

It will combine a 300,000 barrels per day refinery capacity and ethylene-based steam cracker, a building block petrochemical used to manufacture thousands of everyday products.

The facility, which will be built in the city of Panjin, in China’s Liaoning Province, will help meet the country’s growing demand for energy and chemical products.

Mohammed Al Qahtani, Aramco Senior Vice-President of Downstream, said: “China is a cornerstone of our downstream expansion strategy in Asia and an increasingly significant driver of global chemical demand. Continued energy security remains a shared priority and this partnership represents another major milestone in our journey together, supporting China’s vision to create a modern economy grounded in innovation, ambition and sustainability. It will further support Aramco’s broader objective of becoming a global leader in liquids-to-chemicals.”

Source: Aramco

Aramco closes gas pipeline deal with global investor consortium

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Saudi Arabian Oil Company (“Aramco”) and an international investor consortium, led by affiliates of BlackRock and Hassana, announced the successful closing of the lease and leaseback deal previously announced on December 6, 2021. The consortium has acquired 49% stake in Aramco Gas Pipelines Company, a subsidiary of Aramco, for $15.5 billion. The consortium comprises leading institutional investors including, amongst others, Keppel Infrastructure Trust, Silk Road Fund, and China Merchants Capital.

This long-term investment by the consortium represents further progress in Aramco’s portfolio optimization program and highlights the strong investment opportunities presented by Aramco’s significant infrastructure assets. It also underlines Aramco’s strong long-term outlook and the appeal of the Kingdom of Saudi Arabia to leading institutional investors.

As part of the transaction, first announced in December 2021, Aramco Gas Pipelines Company and Aramco entered into a 20-year lease and leaseback arrangement in connection with Aramco’s gas pipeline network. Under this arrangement, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the specified gas products that flow through the network, backed by minimum commitments on throughput. Aramco retains a 51% majority stake in Aramco Gas Pipeline Company, and also retains full ownership and operational control of the gas pipeline network. The transaction does not impose any restrictions on Aramco’s production volumes.

The announcement follows the closing of a $12.4 billion infrastructure transaction in connection with Aramco’s stabilized crude oil pipeline network in June 2021.

Concurrent with closing of this transaction, Aramco has also signed a memorandum of understanding (MoU) with BlackRock, to explore joint opportunities in future energy transition projects related to low carbon energy infrastructure. The MoU reinforces the relationship with BlackRock, enhancing opportunities for possible future collaborations.

Aramco President & CEO, Amin H. Nasser, said: “This agreement is our second landmark infrastructure transaction in less than a year and another major step forward in our long-term value creation strategy. The participation of the consortium led by BlackRock and Hassana underlines the appeal of Aramco’s portfolio to leading global investors as Saudi Arabia’s economic transformation builds momentum, requiring a robust energy infrastructure and network that are vital to meet the needs of an expanding industrial sector.

At the same time as Aramco raises gas production and seeks new opportunities in low-carbon energy sources over the next decade, the importance of our energy infrastructure in relation to global energy security and reliability is expected to grow in significance.”

Abdulaziz M. Al Gudaimi, Aramco Senior Vice President of Corporate Development, said: “We remain focused on maximizing the potential of our assets and assessing new investment opportunities to further enhance our robust balance sheet. The gas infrastructure transaction with BlackRock and Hassana is a testament of the relationship with the global investors and emphasizes gas as a key pillar to grow in domestic and international markets.”

Larry Fink, Chairman and CEO of BlackRock, said: “We are pleased to close this landmark transaction and deepen our partnership with Aramco by signing a Memorandum of Understanding to develop low carbon energy infrastructure together. Getting to a net zero world will not happen overnight. It requires us to shift the energy mix in incremental steps to achieve a green energy future. Bold, forward-thinking incumbents like Aramco have the technical expertise and capital to play a crucial role in this transformation, and we look forward to our future collaboration.”

Saad A. AlFadly, CEO of Hassana Investment Company, added: “We are delighted to achieve closing of this landmark transaction which highlights our focus to invest in critical infrastructures in the Kingdom of Saudi Arabia. We look forward to working with our partners at Aramco and BlackRock to make this a successful long-term investment.”

Source: Aramco

Aramco awards contracts worth $10bn for vast Jafurah field development, as unconventional resources program reaches commercial stage

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The Saudi Arabian Oil Company (“Aramco” or “the Company”) announced the start of development of the vast Jafurah unconventional gas field, the largest non-associated gas field in the Kingdom of Saudi Arabia. The Company has awarded subsurface and Engineering, Procurement and Construction (EPC) contracts worth $10 billion, with capital expenditure at Jafurah expected to reach $68 billion over the first 10 years of development.

It is a significant milestone both for the commercialization of unconventional resources in Saudi Arabia and the expansion of Aramco’s integrated gas portfolio, which will provide additional feedstock to support growth of the Company’s high-value chemicals business, complement its focus on low-carbon hydrogen production and help reduce emissions in the domestic power sector by providing a cleaner-burning alternative to liquid fuel. 

With an estimated 200 trillion standard cubic feet of gas in place, the Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East. This shale play covers an area measuring 17,000 square kilometers and production of natural gas at Jafurah is expected to ramp up from 200 million standard cubic feet per day (scfd) in 2025 to reach a sustainable gas rate of two billion scfd of sales gas by 2030, with 418 million scfd of ethane and around 630,000 barrels per day of gas liquids and condensates, which are essential feedstock for the growing petrochemical industry. It will make Saudi Arabia one of the world’s largest natural gas producers.

HRH Prince Abdulaziz bin Salman Al Saud, Minister of Energy for the Kingdom of Saudi Arabia, said: “I would like to thank the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, and HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, Deputy Prime Minister and Minister of Defense, for their ongoing support of the Kingdom’s energy sector. The development of Jafurah will positively contribute to the Kingdom’s energy mix and it has been made possible thanks to close co-operation between more than 17 different agencies. The government is committed to the empowerment of national companies such as Aramco and no other energy company in the world is empowered to the same extent by the state, or by the Ministry of Energy which oversees the concession to develop the Kingdom’s hydrocarbon resources.”

The project is a key component of the Company’s long-term strategy and Aramco expects total overall lifecycle investment at Jafurah to exceed $100 billion. Through its unconventional gas program at the Jafurah, North Arabia and South Ghawar fields, the Company expects to create more than 200,000 direct and indirect jobs. 

Amin H. Nasser, Aramco President and CEO, said: “This is a pivotal moment in the commercialization of Saudi Arabia’s vast unconventional resources program. It is a breakthrough that few outside the Kingdom thought was possible, and which has positive implications for energy security, economic development and climate protection. Gas has a critical role to play in the energy transition and it will help significantly reduce emissions in the domestic energy sector, while providing a feedstock for low-carbon hydrogen and ammonia. It will also allow Aramco to tap into high-value feedstocks for use in the expanding Downstream petrochemicals industry and our aim is to significantly increase our gas production capacity over the next decade to meet demand growth.”

Aramco recently announced its ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned operated assets by 2050. Jafurah is expected to contribute to Saudi Arabia’s goal of producing half of its electricity from gas and half from renewables as the Kingdom pursues its own 2060 net-zero target. 

At peak production, Aramco’s unconventional gas program is expected to replace around half a million barrels of crude oil per day that would otherwise have been used for domestic consumption. The Jafurah gas development alone is expected to replace more than 300,000 barrels of crude oil per day at peak production. 

Nasir K. Al-Naimi, Aramco’s Upstream Senior Vice President, said: “The development of Jafurah is a game-changer for our Unconventional Resources program. It will be one of the most modern, cost-efficient shale development schemes in the industry and observe the highest environmental and safety standards. Jafurah will be a key enabler of our ambitions moving forward, and we continue to explore new fields, re-evaluate existing ones and evaluate potential joint investment opportunities in both natural gas and natural gas liquids as we pursue our goal of developing an integrated global gas portfolio to meet long-term energy and petrochemicals demand.” 

Aramco has awarded 16 subsurface and EPC contracts valued at $10bn for the Jafurah Gas Plant and gas compression facilities, as well as infrastructure and related surface facilities. These contracts were awarded to domestic and international service companies and involve several projects to enable development of subsurface and surface components of the Jafurah program. 

This will allow for the reliable delivery of gas and condensates through a dedicated surface network that includes a gas processing plant, a gas compression system and network of around 1,500 kilometers of main transfer pipelines, flow lines and gas gathering pipelines. The program also includes construction of the Jafurah Bulk Supply Point, transmission lines, power interconnection for Jafurah Gas Plant and new cogeneration plant facilities. 

In line with Aramco’s Digital Transformation Program, development of Jafurah will incorporate advanced Fourth Industrial Revolution (4IR) technologies, including Industrial Internet of Things (IIoT) and video analytics, to enhance construction, operation and safety. 

Aramco has awarded the majority of Jafurah subsurface contracts, in addition to engineering, material procurement and construction contracts, to contractors based in Saudi Arabia, in association with reputed international contractors and service providers. This is in line with the Company’s efforts to support development of the domestic energy sector and local supply chain partners. In addition, to drive domestic value creation and maximize long-term economic growth and diversification, the Jafurah development program will include an In-Kingdom Total Value Add (iktva) component. Aramco launched the iktva program in 2015 to facilitate development of a diverse, sustainable, and a globally competitive energy sector.

Source: Aramco

Worley awarded a services contract for a residue upgrade project at Aramco’s Ras Tanura refinery

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The project will convert low-value refinery residue into higher-value products including gasoline, jet fuel and ultra-low sulphur diesel.

Under the contract, we will provide early front-end engineering design (pre‑FEED), front-end engineering design (FEED) and project management services for the entire project. These services cover upgrades to the atmospheric and vacuum gas oil from the crude distillation unit, and an upgrade to the atmospheric gas oil from the Kuff condensate unit.

Advisian, our consulting business, led the front-end conceptual studies evaluating multiple process configurations. This included the development of cost estimates for possible options, integration of technology licensors, and optimization of existing brownfield assets.

“Worley has a long-standing relationship with Aramco and this important project builds on our extensive experience at the Ras Tanura refinery,” said Mark Brantley, President of Europe, Middle East and Africa. “We will combine our global refining and in-Kingdom engineering and project management expertise to continue delivering sustainable operations to Aramco, while also remaining committed to upskilling our Saudi workforce.”

Between 2007 and 2013, we provided front-end engineering and project management services for the refinery’s major expansion. Our scope also covered modifications to the refinery to comply with future environmental regulations. 

Source: Worley

Aramco closes $12.4 billion infrastructure deal with global investor consortium

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Aramco and an international investor consortium, including EIG and Mubadala, today announced the successful closing of the share sale and purchase agreement, in which the consortium has acquired a 49% stake in Aramco Oil Pipelines Company, a subsidiary of Aramco, for $12.4 billion.

The consortium consists of a broad cross-section of investors from North America, Asia and the Middle East. This long-term investment by the consortium underscores the compelling investment opportunity presented by Aramco’s globally-significant pipeline assets, the Company’s robust long-term outlook and the attractiveness of the Kingdom of Saudi Arabia to institutional investors.

As part of the transaction, first announced in April 2021, Aramco Oil Pipelines Company and Aramco entered into a 25-year lease and leaseback agreement for Aramco’s stabilized crude oil pipelines network. Aramco Oil Pipelines Company will receive a tariff payable by Aramco for stabilized crude oil flows, backed by minimum volume commitments. Aramco continues to hold a 51% majority stake in Aramco Oil Pipelines Company and retains full ownership and operational control of its stabilized crude oil pipeline network. The transaction does not impose any restrictions on Aramco’s actual crude oil production volumes, which are subject to production decisions made by the Kingdom.

Source: www.aramco.com

Aramco signs $12.4 billion infrastructure investment deal with EIG-led consortium

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Aramco has signed a deal with a consortium led by EIG Global Energy Partners (“EIG”), one of the world’s leading energy infrastructure investors, to optimize its assets through a lease-and-lease-back agreement involving its stabilized crude oil pipeline network. 

Upon closing, Aramco will receive upfront proceeds of around $12.4 billion, further strengthening its balance sheet through one of the largest energy infrastructure deals globally.  The transaction represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximize value for its shareholders. It also reinforces Aramco’s role as a catalyst for attracting significant foreign investment into the Kingdom.

As part of the transaction, a newly-formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s stabilized crude oil pipelines network for a 25-year period. In return, Aramco Oil Pipelines Company will receive a tariff payable by Aramco for the stabilized crude oil that flows through the network, backed by minimum volume commitments. Aramco will hold a 51% majority stake in the new company and the EIG-led consortium will hold a 49% stake. Aramco will continue to retain full ownership and operational control of its stabilized crude oil pipeline network. The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes that are subject to production decisions issued by the Kingdom.

Aramco President & CEO, Amin H. Nasser, said: “This landmark transaction defines the way forward for our portfolio optimization program. We are capitalizing on new opportunities that also align strategically with the Kingdom’s recently-launched Shareek program. Aramco’s strong capital structure will be further enhanced with this transaction, which in turn will help maximize returns for our shareholders. Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most robust energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation.” 

Abdulaziz M. Al Gudaimi, Aramco Senior Vice President of Corporate Development, said: “In addition to strengthening our balance sheet, this deal sets a new benchmark for infrastructure transactions both regionally and internationally. It is a vote of confidence in our long-term outlook by EIG and other heavyweights in the investment world and reflects the significant progress we are making in our portfolio optimization program. This transaction unlocks value from our assets and strengthen Aramco’s resilience, agility and ability to respond to changing market dynamics.” 

R. Blair Thomas, EIG’s Chairman & CEO, said: “We are honored to partner with Aramco, an undisputed industry leader, on this landmark transaction.  Aramco’s oil pipeline network is a marquee global infrastructure asset. We look forward to investing in this infrastructure which is critical to the global economy, and to driving value for our institutional investors worldwide.”  

The long-term investment by EIG and other institutional investors underscores the compelling investment opportunity represented by Aramco’s globally-significant pipeline assets, the Company’s long-term outlook and the attractiveness of the Kingdom of Saudi Arabia as a desirable investment destination for international investors. The transaction is expected to close as soon as practicable, subject to customary closing conditions, including any required merger control and related approvals. 

Source: www.aramco.com

Siemens Energy signs long-term service contract with Aramco to ensure power supply at key oilfields

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Siemens Energy has signed its first long-term service agreement (LTSA) with Aramco, covering a range of turbines and generators at four major oil fields. This contract is expected to enable Aramco to improve reliability, efficiency, and availability of power supply, thereby safeguarding oil and gas production.

 This 15-year contract will enable Aramco to benefit from Siemens Energy’s comprehensive warranties and extended service support, increasing the availability and the reliability of the power supply for these strategically important assets. Furthermore, Siemens Energy will ensure resilience by providing the necessary resources and material availability in the Kingdom to face in case of any emergency. “Siemens Energy is a strategic partner and a trusted service provider, that can ensure reliable power supply at these major oil fields, helping improve operational excellence and continuously enhancing the performance of our strategic assets,” said Mohammad Al-Shammary, Aramco VP of Procurement and Supply Chain Management .

The agreement with Aramco will also enable Siemens Energy to expand localization plans through the development of high-tech industry and training of a skilled Saudi workforce, to increase job expertise and raise domestic capabilities in Saudi Arabia, whilst benefitting the local economy.Siemens Energy’s activities will meet the requirements outlined in the In-Kingdom Total Value Add Program (IKTVA), which was created by Aramco to baseline, measure, and support increased levels of localization.“Siemens Energy is dedicated to providing and ensuring stable, efficient and resilient power supply to Aramco, while delivering value beyond the scope of the contract, by contributing to the local economy and developing the skills and employability of Saudi nationals,” said Mahmoud Sulaimani, Managing Director of Siemens Energy Saudi Arabia.  Siemens Energy’s Service Workshop, formerly known as ISCOSA, is currently in the relocation phase to the Siemens Dammam Energy Hub, Siemens Energy’s largest gas turbine and compressor manufacturing facility in the region , which includes a full-fledged service set up to cover the entire product lifecycle.

The Hub’s advanced Service Workshop is where any kind of rotating equipment can be serviced, from small repair work over pumps, gears to compressors, heavy generators, and large gas turbine rotors with their Hot Gas Parts. Our services cover general inspections, regular repairs, modifications & upgrades, and emergency services under 24/7 conditions.

“This long-term service agreement is expected to help achieve the highest efficiency, reliability and availability of Aramco’s plant, with optimized parts management and with a core local team dedicated to the plants’ needs. We wish to thank Aramco for trusting Siemens Energy and we hope that this long-term service agreement with Aramco will be the first of many,” said Gianluigi Di Giovanni, VP Generation & Industrial Service Middle East and North Africa, Siemens Energy.

Source: press.siemens-energy.com

Aramco awards major Long-Term Agreements to eight companies for its oil and gas brownfield projects

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Aramco has announced a new contracting strategy for the Company’s oil and gas brownfield and plant upgrade projects. The strategy focuses on establishing new businesses and developing partnerships based on sustainability and new technologies via Aramco’s giant projects by awarding long-term contracts to reputable and experienced contractors to improve cost efficiency and the quality and safety of the projects.

Following Aramco’s approval of the new contracting strategy, contractors’ companies were invited to submit their proposals, and after a thorough evaluation process, eight companies have been selected to carry out the work:

  1. Consortium of Nasser Saeed Al-Hajri And Contracting /Samsung EPC Co. Ltd.
  2. Daelim Saudi Arabia Co. LTD.
  3. Engineering for The Petroleum and Process Industries (Enppi) Branch.
  4. GS Construction Arabia Co. Ltd.
  5. Snamprogetti Engineering and Contracting Co. Ltd. (Saipem).
  6. JGC Gulf Engineering Co. Ltd.
  7. Branch of Technip Italy S.P.A.
  8. Branch of Hyundai Engineering and Construction Co. LTD.

The scope of the LTAs includes engineering, procurement, construction, start-up and pre-commissioning of each project, as well as the installation of the upgraded facilities in the designated operating areas. The contracts are established for a period of six years with an option to exercise another six years extension.

In addition, the contracts are developed with a special emphasis on improving Saudization, local content and supply chains through Aramco’s In-Kingdom Total Value Add (IKTVA) program, helping Aramco to meet its IKTVA targets. The contracts mandate a minimum commitment to use 39% local content and supply chains initially, increasing to a 60% commitment within six years.

Source: aramco.com