Technologies of the future: How will Crude Oil to Chemicals (COTC) transform Aramco’s competitive advantage
Abdulaziz Al-Judaimi, SVP Downstream, Saudi Aramco, and keynote speaker at the 6th GPCA R&I Summit in Bahrain, speaks exclusively to GPCA Insight Express about the Crude Oil to Chemicals (COTC) project and the company’s plans for the future
How will the COTC project help Saudi Aramco become a more competitive player in chemicals globally, and how does it contribute to Saudi Vision 2030?
Our COTC project – which we are undertaking with SABIC – is one of a number of projects, ventures, and investments that we have undertaken in order to expand and maximize the efficiency of our hydrocarbon value chain. Together, we will develop a fully-integrated crude-to-chemicals enhanced refinery complex in the Kingdom which will achieve a crude to chemicals conversion rate of 45% – 50%.
Through this project we will be optimizing several energy-intensive industrial processes, which will create cost and operational efficiencies that result in high-value chemicals product streams in higher quantities and with less emissions. The reduced steps within the refining process allow us to drive down the cost of production and bring lower-cost petrochemicals to the market.
Saudi Aramco is investing in and developing its own proprietary technology. How does your focus on research and innovation tie in with your strategy of becoming a leading chemical player that is able to compete on a global scale?
A competitive edge in the chemical industry can be gained via feedstock advantage, proximity to end-use market, economy of scale, or technology advantage. Economy of scale is a function of your financial resources, and once you have reached world scale capacity, you will not be able to gain further competitive advantage without developing technology. Feedstock advantage and proximity to the end-use market are inherent to your location. It is true that you can form partnerships to improve upon this by offering financing, but so can any other entity who has sufficient funding. Another possibility to enter a partnership in a more favorable location is by offering to share proprietary technology or know-how (by way of efficient plant operation, marketing/distribution networks etc.). This brings us to the final pathway to gaining an economic edge – technology. If you have proprietary technology, you have a barrier to entry that is difficult to surmount for some years. It is true that with time, others will see your success and emulate your technology; but if you are focused on continuous improvement through research and innovation, you will be able to maintain an edge over others. Apart from our inherent feedstock advantage and location, we see technology as a key pathway to gaining and maintaining a competitive advantage in the years ahead.
“Apart from our inherent feedstock advantage and location, we see technology as a key pathway to gaining and maintaining a competitive advantage in the years ahead.”
“With our production capacities increasing year by year, we are confident that our chemicals business will be a central driver in bringing our downstream operations in line with our upstream operations.”
Tell us more about your Thermal Crude to Chemicals (TC2C™) technology – what’s the significance of the technology and what does it enable?
TC2C was successfully piloted in 2017 and produced a chemical yield higher than previously achievable. The technology helps to reduce capital and energy intensities by replacing expensive refining steps with a single crude oil conditioning step, resulting in increased throughput of higher-value petrochemical products.
With this technology we hope to achieve up to a 70% conversion rate of crude into chemicals, which will further drive down production costs and increase competitiveness. To assist in reaching this target, we have recently partnered with McDermott and Chevron Lummus to scale-up, de-risk, and commercialize the technology, which should be completed by 2020.
What plans do you have for further developing your chemical capabilities in the future?
Chemicals is central to Saudi Aramco’s downstream operations, which are now the fastest-growing part of our business. So, it is not as much a question of future development as it is a question of continuing the development we initiated years ago. Just over the past few years we completed the Sadara Chemical Company with our partner Dow, saw through the expansion of Petro Rabigh, fully acquired ARLANXEO, created the Aramco Chemicals Company to handle our global marketing function, and are currently working on projects in areas throughout Asia, Europe, and North America that will be coming on line periodically through 2025-26. With our production capacities increasing year by year, we are confident that our chemicals business will be a central driver in bringing our downstream operations in line with our upstream operations.
COTC is a good example of how much innovation can enable and the significance of investing in R&D for the chemical industry. As a keynote speaker at the 6th GPCA R&I Summit, what message do you wish to send to Arabian Gulf chemical producers when it comes to the role of innovation in creating value and competitiveness?
As the world becomes increasingly more competitive, it is time for us to take a lead in developing technologies that are tailored to take full advantage of our natural resources. We as a region need to focus on improving the value we obtain from our resources by converting them to products that can give higher margins. Concurrently, we improve the know-how and intellectual prowess of the young people in our nations, and we hope that in the future this push into innovation will lead to our young people becoming the inventors and innovators of many products in the future, including completely new products not related to our natural resources.
“As the world becomes increasingly more competitive, it is time for us to take a lead in developing technologies that are tailored to take full advantage of our natural resources.”