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Saudi Aramco to seek partners to build three power stations

DUBAI - Saudi Aramco, the world’s largest state-owned oil company, is seeking partners to help build three power plants for its expanding refining and chemicals businesses, two people with knowledge of the plan said.

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The company aims to build three facilities and expand units at three existing sites at a total cost of about $1 billion, said the people, who asked not to be named since the project is not public. A Dharan-based spokesman for Saudi Aramco declined to make any immediate comment when contacted by telephone. Aramco’s plan may quadruple its generating capacity, adding as much as 3,000 megawatts of power, one of the people said. Those facilities may run on crude oil-based liquid fuels since the country lacks natural gas resources to guarantee supply, the person said.

Gulf oil producers such as Saudi Arabia are expanding petrochemical production and refining capacity to diversify their economies away from exports of raw crude and manufacture higher-margin products. The project would supply power only to Aramco’s facilities rather than the national network.

Once complete, the plan would give Aramco control over about eight per cent or the country’s overall generating capacity. Saudi Arabia’s electricity capacity was about 45,000 megawatts last year, according to state provider Saudi Electricity Co. Tenders for the project may be issued in the second quarter next year, the people said. The power plant expansion was previously reported by the Middle East Economic Digest. Aramco is building three refineries, at Jubail in the east, Yanbu on the Red Sea and Jazan in the south. It is also constructing a petrochemical complex at Jubail, an industrial city on the Gulf coast. Power plants capable of producing between 500 megawatts and 1,000 megawatts each may be built in those cities, according to the project’s initial plan.

The company hasn’t fully determined the size and fuel source for the generators. Aramco gets direct supply of 1,076 megawatts from Tihama Power Generation Co., a joint venture of International Power Plc and builder Saudi Oger Ltd. Tihama’s gas-fired plants are located at Aramco production facilities at Ju’Aymah, Ras Tanura, Shedgam and Uthmaniyah. Tihama may be asked to expand those generators as part of Aramco’s strategy, the people said.

Saudi Oger and International Power spokespeople declined to comment on whether Tihama would be involved in Aramco’s expansion plan. Aramco also draws power from the national electricity grid. Producing its own power will give it more control over supply to its refinery sites and over fuel provided to the generators, one of the people said.

Aramco is building a 400,000 barrel-a-day refinery at Jubail with partner Total SA and a chemical complex with Dow Chemical Co. in the same city. It’s building a same-sized refinery at Yanbu and a smaller facility at Jazan, paying for those projects 
itself.