Saudi Aramco, SABIC Launch Bidding at Key Chemical Project

Saudi Aramco and Saudi Basic Industries Corp (SABIC) have launched bidding for engineering work on their joint crude oil to chemicals project, industry sources said, a key step towards developing the $20-billion-plus complex.

The project, known as COTC, the first major scheme to bring the two giants together, is expected to process Arabian Light and Extra Light crude oil, one of the sources told Reuters.

Several plants are expected to be built including a 400,000-barrels-per-day integrated crude distillation and vacuum unit, a distillate hydrotreater, a vacuum gas oil hydrocracker, a residual fluid catalytic cracking unit, a mixed feed cracker, as well as polyethylene, polypropylene, butadiene and aromatics recovery units.

Aramco <IPO-ARMO.SE> and SABIC are still considering where to locate the chemicals site; at Yanbu, near a power plant; or in Jubail, close to Sadara, which is an Aramco joint venture with U.S. company Dow Chemical.

The closing date for bids for pre-front end engineering and design work (pre-FEED) and FEED for the COTC is Sept. 25, one of the sources said, adding that the plant is expected to be commissioned by the end of 2024.

Another source said pre-FEED is expected to be completed by late 2018, with FEED to be finalized by late 2019. Aramco and SABIC are expected to launch bidding for construction by mid-2020.

SABIC did not immediately respond to a Reuters request for comment. Aramco said it "declines to comment on rumor or speculation."

Aramco's chief executive has said it was a priority for the company to convert crude oil to chemicals as the state oil producer aims to diversify operations in the run-up to an initial public offering of shares next year.

Downstream, which covers refining and chemicals, will help Aramco boost value from hydrocarbons by securing revenue streams and become less vulnerable to oil price swings.