Saudi Arabia signs for refinery
Saudi Aramco and Total have signed a comprehensive memorandum of understanding (MOU) related to the planned development of a 400000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia.
The proposed refinery will be designed to process Arabian heavy crude and will produce high-quality refined products that meet current and future product specifications. The project is currently scheduled to start up in 2011.
“This proposed project represents an excellent opportunity to build on the Kingdom’s strategy of addressing global energy demand while attracting foreign investment to expand its economy,” said Abdallah S Jum’ah, Saudi Aramco’s president and chief executive officer. “I am proud that Saudi Aramco can support the Kingdom in this process, and I am gratified that our friends and colleagues from Total will be our partners in this world-class project,” he added.
“Total is proud to have been chosen by Saudi Aramco to build an efficient and full conversion refinery that will provide the country with an increased capacity to meet different markets needs in refined petroleum products,” said Thierry Desmarest, Total chairman and chief executive officer. “This agreement reinforces our presence in Saudi Arabia and through this long term project strengthens our close cooperation with Saudi Aramco,” he added.
The MOU sets out the agreement between Saudi Aramco and Total regarding the key parameters of the project, the project configuration, and a broad range of the major technical, commercial, legal, and financial terms.
To proceed as quickly as possible with the project, the parties have agreed to undertake without further delay a comprehensive joint front-end engineering and design (FEED) study. The definitive documents to implement the project will be negotiated in parallel with the joint FEED study.
In terms of the project’s commercial structure, Saudi Aramco and Total have agreed to form a joint venture company, with each holding an ownership interest of 35 per cent. Subject to required regulatory approvals, the parties are planning to offer up to 30percent interest in the project to the Saudi public.
Saudi Aramco will supply the project with 400000 barrels per day of Arabian heavy crude oil. Saudi Aramco and Total will share the marketing of the refinery production.
Speaking at the MOU signing, Jum’ah explained the importance of this latest project: “Our industry is in the midst of a tremendous period of change, and I would argue, at an historic crossroads – or as the old proverb says, we are living in interesting times. We are producing more energy than at any time in history, are operating more efficiently than ever before, and continue to have a tremendous impact on societies and economies around the globe. But what the petroleum industry has gained in efficiency we have lost in flexibility, in part due to chronic global underinvestment in facilities and infrastructure.”
He then went on to describe the importance of downstream investments to the country’s economy: “Perhaps nowhere along the value chain do we see capacities as tight as they are in the refining sector. Crude oil is of little good to the average end-user until it is refined into useful products, and at the moment, our industry’s ability to do that is being stretched. That is why downstream investments – like the Jubail export refinery – are so critical at this point in time, and why forward-looking companies like Total and Saudi Aramco are working so diligently to meet the refining challenge. This facility in particular, with its ability to process large quantities of heavy crude, not only eases tight refining capacities but also addresses the mismatch between available crude supplies and refinery configurations that is complicating today’s market situation.”
Mega projects
More than E79billion will be spent on constructing mega projects over the next five years in Saudi Arabia and business, academic and government leaders met in al-Khobar recently to discuss ways to develop the Kingdom’s work force so that more of that money will stay in the local economy.
The two-day Mega Projects and Learning Dialogue was organised by the Gulf Society for Organisational Learning (Gulf SoL) and sponsored by Saudi Aramco and Saudi Basic Industries Corporation (SABIC). The discussions focused on using the current building boom as an opportunity to lift skill levels in the construction and engineering sectors of the Saudi economy.
“I have a vision for the future, a vision full of possibilities,” said Saudi Aramco’s senior vice president of engineering and operations services Salim S Al-Aydh, “a future where Saudi Arabia is a centre for engineering excellence, a future where Saudi-based companies are major players in mega projects across the Gulf region and beyond. This will require that we do business differently.
“In the last oil boom,” he said, “we invested heavily in construction of new plant facilities. We left behind a legacy of steel and concrete. This time, as we build up new plants, we will invest not only in our physical capacity for oil and gas production, but also in the capacity of our people to plan and execute major projects. Alongside the steel and concrete of our new facilities, we want to leave behind a core competency in engineering, procurement and construction for Saudi Arabia.”
Sabic vice president of human resources, Mohammed Al-Bat’hi, gave the gathering a sobering look at the challenges of ‘Saudisation’. Kingdom employment statistics, he said, show that of a total private-sector labour force of 6.5 million, Saudis represent just 12percent. Although that number is rising, without a concerted effort, money from the massive construction boom is more likely to travel overseas as expatriate worker salaries rather than fuelling growth and prosperity in the Kingdom.
Noting that the Kingdom graduates about 100000 students from colleges and universities across the land and overseas, Al-Bat’hi said that only about
20 000 students graduate from technical and vocational institutes.
More than 20000 engineers and 300000 technical and trade positions will be required by 2010, he said. Graduating engineers account for less than 10percent of the annual university crop.
“We can turn challenges into opportunities by investing in education geared to market requirements,” Al-Bat’hi said. "We need higher quality outcomes in technical and science fields.”
He said education needed to give students good analytical capabilities and that the highest standards should be maintained in craft and semi-skilled training programmes, emphasising the need for fostering discipline and a strong work ethic in the younger generation.
Meanwhile, Mohammed Binladin, a vice president of the Saudi Binladin Group, and Hamed Amin, a vice president of Consolidate Contractors Corporation, both discussed massive training efforts at their companies.
Amin told participants of his company’s support of a Riyadh training centre where students learn carpentry, scaffolding, pipefitting, steel fixing, plumbing and welding – all skills vitally needed in the construction sector.
The Saudi Binladin Group employs more than 50000 workers in the Kingdom. Binladin said the company is working on the creation of the National Institute for Construction Technology, an ambitious effort that could be turning out more than 2200 skilled trade workers annually in the near future.
“We need to empower human capital and value it more than assets,” Binladin said. “It’s the most important asset a nation can have.”
The proposed refinery will be designed to process Arabian heavy crude and will produce high-quality refined products that meet current and future product specifications. The project is currently scheduled to start up in 2011.
“This proposed project represents an excellent opportunity to build on the Kingdom’s strategy of addressing global energy demand while attracting foreign investment to expand its economy,” said Abdallah S Jum’ah, Saudi Aramco’s president and chief executive officer. “I am proud that Saudi Aramco can support the Kingdom in this process, and I am gratified that our friends and colleagues from Total will be our partners in this world-class project,” he added.
“Total is proud to have been chosen by Saudi Aramco to build an efficient and full conversion refinery that will provide the country with an increased capacity to meet different markets needs in refined petroleum products,” said Thierry Desmarest, Total chairman and chief executive officer. “This agreement reinforces our presence in Saudi Arabia and through this long term project strengthens our close cooperation with Saudi Aramco,” he added.
The MOU sets out the agreement between Saudi Aramco and Total regarding the key parameters of the project, the project configuration, and a broad range of the major technical, commercial, legal, and financial terms.
To proceed as quickly as possible with the project, the parties have agreed to undertake without further delay a comprehensive joint front-end engineering and design (FEED) study. The definitive documents to implement the project will be negotiated in parallel with the joint FEED study.
In terms of the project’s commercial structure, Saudi Aramco and Total have agreed to form a joint venture company, with each holding an ownership interest of 35 per cent. Subject to required regulatory approvals, the parties are planning to offer up to 30percent interest in the project to the Saudi public.
Saudi Aramco will supply the project with 400000 barrels per day of Arabian heavy crude oil. Saudi Aramco and Total will share the marketing of the refinery production.
Speaking at the MOU signing, Jum’ah explained the importance of this latest project: “Our industry is in the midst of a tremendous period of change, and I would argue, at an historic crossroads – or as the old proverb says, we are living in interesting times. We are producing more energy than at any time in history, are operating more efficiently than ever before, and continue to have a tremendous impact on societies and economies around the globe. But what the petroleum industry has gained in efficiency we have lost in flexibility, in part due to chronic global underinvestment in facilities and infrastructure.”
He then went on to describe the importance of downstream investments to the country’s economy: “Perhaps nowhere along the value chain do we see capacities as tight as they are in the refining sector. Crude oil is of little good to the average end-user until it is refined into useful products, and at the moment, our industry’s ability to do that is being stretched. That is why downstream investments – like the Jubail export refinery – are so critical at this point in time, and why forward-looking companies like Total and Saudi Aramco are working so diligently to meet the refining challenge. This facility in particular, with its ability to process large quantities of heavy crude, not only eases tight refining capacities but also addresses the mismatch between available crude supplies and refinery configurations that is complicating today’s market situation.”
Mega projects
More than E79billion will be spent on constructing mega projects over the next five years in Saudi Arabia and business, academic and government leaders met in al-Khobar recently to discuss ways to develop the Kingdom’s work force so that more of that money will stay in the local economy.
The two-day Mega Projects and Learning Dialogue was organised by the Gulf Society for Organisational Learning (Gulf SoL) and sponsored by Saudi Aramco and Saudi Basic Industries Corporation (SABIC). The discussions focused on using the current building boom as an opportunity to lift skill levels in the construction and engineering sectors of the Saudi economy.
“I have a vision for the future, a vision full of possibilities,” said Saudi Aramco’s senior vice president of engineering and operations services Salim S Al-Aydh, “a future where Saudi Arabia is a centre for engineering excellence, a future where Saudi-based companies are major players in mega projects across the Gulf region and beyond. This will require that we do business differently.
“In the last oil boom,” he said, “we invested heavily in construction of new plant facilities. We left behind a legacy of steel and concrete. This time, as we build up new plants, we will invest not only in our physical capacity for oil and gas production, but also in the capacity of our people to plan and execute major projects. Alongside the steel and concrete of our new facilities, we want to leave behind a core competency in engineering, procurement and construction for Saudi Arabia.”
Sabic vice president of human resources, Mohammed Al-Bat’hi, gave the gathering a sobering look at the challenges of ‘Saudisation’. Kingdom employment statistics, he said, show that of a total private-sector labour force of 6.5 million, Saudis represent just 12percent. Although that number is rising, without a concerted effort, money from the massive construction boom is more likely to travel overseas as expatriate worker salaries rather than fuelling growth and prosperity in the Kingdom.
Noting that the Kingdom graduates about 100000 students from colleges and universities across the land and overseas, Al-Bat’hi said that only about
20 000 students graduate from technical and vocational institutes.
More than 20000 engineers and 300000 technical and trade positions will be required by 2010, he said. Graduating engineers account for less than 10percent of the annual university crop.
“We can turn challenges into opportunities by investing in education geared to market requirements,” Al-Bat’hi said. "We need higher quality outcomes in technical and science fields.”
He said education needed to give students good analytical capabilities and that the highest standards should be maintained in craft and semi-skilled training programmes, emphasising the need for fostering discipline and a strong work ethic in the younger generation.
Meanwhile, Mohammed Binladin, a vice president of the Saudi Binladin Group, and Hamed Amin, a vice president of Consolidate Contractors Corporation, both discussed massive training efforts at their companies.
Amin told participants of his company’s support of a Riyadh training centre where students learn carpentry, scaffolding, pipefitting, steel fixing, plumbing and welding – all skills vitally needed in the construction sector.
The Saudi Binladin Group employs more than 50000 workers in the Kingdom. Binladin said the company is working on the creation of the National Institute for Construction Technology, an ambitious effort that could be turning out more than 2200 skilled trade workers annually in the near future.
“We need to empower human capital and value it more than assets,” Binladin said. “It’s the most important asset a nation can have.”
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