Samsung Engineering wins $653 million deal to build major Saudi PDH plant

South Korea's Samsung Engineering said April 14 it had won a $653 million contract to build a propane dehydration plant in Saudi Arabia for Advanced Global Investment Co (APC), a subsidiary of Saudi-listed Advanced Petrochemical Co.

The PDH plant will be able to produce 843,000 mt/year of propylene, according to Samsung Engineering -- equivalent to propane processing capacity of about 1 million mt/year when running at a 100% rate, making it the world's largest PDH plant, according to S&P Global Platts Analytics.

Samsung Engineering will also build utilities and offsite facilities in a project slated for completion in 2024 in Jubail Industrial City, 100 km north of Dammam. AGC is a subsidiary of Saudi-listed Advanced Petrochemical Co. (APC).

The contract for what will be the fourth PDH complex in Saudi Arabia was signed March 13. The three plants currently in operation consume about 1.6 million mt/y of propane feedstock, according to Platts Analytics.

The PDH plants include a National Petrochemical Industrial Co. facility in Yanbu on the Red Sea, with propylene production capacity of 400,000 mt. There is also a 500,000 mt/year facility also operated by APC and the 450,000 mt/year Al Waha plant, both on the Persian Gulf coast, Platts Analytics data showed.

Saudi propane use

Saudi Arabia has been consuming an increasing amount of propane produced domestically, tightening supply for exports that are focused on term contracts and meaning less spot supply.

Saudi Aramco marketing manager Ali Alam told a recent seminar that domestic LPG demand, especially for the petrochemical sector, has been growing, with industry accounting for 90% of domestic demand and the residential sector accounting for 8%, making Saudi Arabia the world's second-largest consumer of LPG for the petrochemical sector.

Aramco supplies more than 1 million mt/month of LPG to 18 petrochemical plants on the kingdom's east and west coasts, of which 70% is propane, Alam said, adding the company tended to export about butane and propane in a roughly 50:50 ratio but skewed towards butane.

Higher domestic petrochemical demand for LPG also followed Aramco's 70% acquisition of Saudi Basic Industries last June. At the end of 2018, SABIC's annual production was 75.3 million mt, including 61.8 million mt of petrochemical and specialty products.

Propane made up 63% of Saudi LPG production in 2018 and butane 35%.

Domestic demand -- of which Saudi Arabia ranks fourth after China, the US and India -- takes up 67% of production and the remaining 33% is exported.

Saudi Aramco acceptances of term LPG nominations for April loadings came with lower volumes for the third month in a row, as the kingdom extended crude production caps into April, along with propane tightness as supply was diverted to domestic petrochemical plants, trade sources said.

Saudi Arabia is set to revive some of its crude production over the next three months, in turn lifting LPG production. Lifters hope that May acceptances, due by April 20, would be largely in line with nominations.

Saudi Aramco's LPG exports across 2020 totaled 7.9 million-8.1 million mt, according to market estimates.

Saudi Aramco saw its reserves of crude and other liquids dip 1.6% in 2020 despite new finds, but the world's top oil company said its reserves remained sufficient to pump at current levels for more than 50 years.

Aramco's proved reserves of crude, condensate, and NGLs ended 2020 at 224.1 billion barrels, down 3.6 billion barrels from year-earlier levels, Aramco said in its annual report.