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Saudi Aramco and Sabic lead Middle-East downstream projects

$8.9 billion petrochemical projects awarded on H1-2012

Middle-East countries and especially Saudi Arabia have been extremely active on the Downstream sector during the first half 2012 in awarding $8.9 billion worth of petrochemical projects.

Compared with last year this amount of capital expenditure represents 88% increase as only $1 billion had been awarded on the same period last year.

These capital expenditures were due to large packages being awarded from giant petrochemical projects on going for some years:

 – $ 1.61 billion come from five packages awarded by Sadara, the joint venture between Saudi Aramco and Dow Chemical building up a $20 billion petrochemical complex in Al Jubail Industrial City, Saudi Arabia. Three of these packages went to Tecnicas Reunidas.

 – $ 3.4 billion are related to the contracts signed by PetroRabigh, the joint venture between Saudi Aramco and Sumitomo Chemical for the Expansion Phase 2 with South Korean contractors (GS Engineering & Construction,Daelim Industries), with UK’s Petrofac and JGC from Japan

 – $ 3.4 billion are due to the Kemya Elastomers project, the Sabic and ExxonMobil joint venture, contracted to South Korean Daelim Industries for three packages, Spanish Tecnicas Reunidas for two packages, and French Technip for one.

 – $ 0.5 billion were placed by Sabic for various local projects to local contractors.

Petrofac, Technip and Tecnicas Reunidas to continue to challenge South Korean EPCs

Even if these capital expenditures have been awarded on the same short period of time while related to projects under long standing execution they do not come as a peak since second half 2011 was also on a similar high level

With $9.5 billion of contracts signed on second half 2011, the first half 2012 reflects a sustainable trend.

The key point of these projects is how much they are related to Downstream activities with some good reasons:

 – High oil prices and low gas prices push in favor of integrated UpstreamDownstream business models.

 – Shortage of available gas as feedstock in some Middle-East regions justify to invest in mixed cracker.

 – Global demand increasing for synthetic rubber and all associated chemical products boost new projects.

 – Reducing the Middle-East countries‘ revenues reliance on crude oil prices motivates the local Governments to invest in higher added value hydrocarbon activities.

 – Not least but last, the creation of local jobs to reduce unemployment and enhance the competence of the local work force is coming more and more on the agenda.

All these factors pushing in favor of the Downstream activities are related to long term trends, thus the engineering companies, such as Daelim Industries, GS Engineering & Construction, JGC, Petrofac, Technip,  Tecnicas Reunidas and others will not end soon to book large orders from Dow Chemicals, ExxonMobil, Sabic, Saudi Aramco, Sumitomo Chemicals and others for further Downstream petrochemical projects.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer


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