Total

Knowledge transfer through a strong partnership

 

Rapid entry

 

Total first invested in Saudi Arabia through a 2007 joint venture with Zahid Group for lubricants and special fluids activities, Saudi Total Petroleum Products, a first successful partnership in Saudi Arabia. Just one year later in 2008, Total and Saudi Aramco decided to create the Saudi Aramco Total Refining and Petrochemical (SATORP) joint venture in order to build, in Jubail, one of the world’s most efficient refineries.

SATORP was fully operational by 2014. Among the world’s largest refining and petrochemicals platforms, it produces a wide range of high-value-added refined products: liquefied petroleum gas (LPG), naphtha, gasoline, jet fuel, diesel and petroleum coke as well as petrochemical products: benzene, propylene and paraxylene.

 

SATORP makes up one of Saudi Aramco’s first forays into the downstream petrochemical business. Total saw the advantages of securing a reliable crude oil supply on a large scale, something Aramco could provide at a level above any other oil producer on the globe, controlling a fifth of the world’s proven oil reserves.

 

Major alliance

 

The creation of SATORP brought together two giants – oil majors from the international top class. Together they formed a strong relationship which involved transferring downstream and petrochemical know-how from Total to Aramco, while at the same time Aramco was able to guide Total on how to invest in the local market, including how to best hire and train Saudi staff.

 

SATORP’s integrated petrochemical activities marked a first for Aramco and Saudi Arabia, and unlock new possibilities for downstream processing. Propylene and benzene are sold to local converters which take these products and further process them into specialty chemicals that can be used in manufacturing and other industries. So far, SATORP’s paraxylene production is being exported, although it is working with Saudi Aramco and other actors to seek new opportunities for paraxylene use within the Kingdom.

 

SATORP was also the Kingdom’s first producer of petroleum coke, coming on-line one year before YASREF, a fellow refinery on the west coast of the Kingdom. By investing in a coking unit, SATORP was able to convert conventional heavy fuel oil from the refining process into high value gasoline and diesel, and into petroleum coke, which is exported for use in power generation and cement production.

 

In liquid fuels, SATORP again took the extra step already at design stage in 2008, to make sure all of its products meet the highest international specifications. Producing ultra-low-sulfur jet fuel, gasoline and diesel opens the door to all of the European, American and Asian markets where the most rigorous specifications are applied. Having this flexibility enables the company to take advantage of seasonal shifts in driving, heating and other habits. As the UN International Maritime Organization implements its legislation on marine fuel oil, or bunker, low-sulfur fuels, prices are also expected to rise in 2020. Low-sulfur diesel-related products will be in higher demand.

 

Returning the favor

 

Four years after the plant’s start up, 70% of SATORP’s employees are Saudi nationals, and the company continues to work for more. SATORP has been in the advantageous position of having both Saudi Aramco and Total’s expertise at its fingertips. The relationship between Total and Saudi Aramco is a global partnership that features exceptional expertise in the field of refining and petrochemicals.

 

In the early days, technical expertise largely came from Total, but since start-up, most of these positions have been permanently handed over to Saudi nationals. In order to achieve this target, Saudi Aramco and Total, trained nearly 400 Saudis to be plant operators with on-site training in a dedicated SATORP training center. Another 28 Saudi engineers completed their studies in France through a partnership with Institut Français du Pétrole - Énergies Nouvelles, the French Institute of Petroleum. In a similar vein, 25% of all material procurement costs were provided by Saudi companies.

 

Global automated powerhouse

 

SATORP now has 1066 employees running a sophisticated and highly-automated complex. As Saudi Arabia aims to incentivize the adoption by local manufacturers of Industry 4.0 systems – i.e. connected devices and automation - Saudi refineries have led the way with the most advanced multivariable controls. This consists of capturing live data and optimizing the refinery on a second-by-second basis; whereas a human operator can examine up to a dozen data points at the same time, a multivariable control can track hundreds of indicators.

 

With computers measuring and analyzing every step of the operations, to optimize the processes and keep the products as close to the specifications as possible, SATORP was able to minimize incidence of human error. This in turn allowed SATORP to increase capacity from 400,000 up to 440,000 barrels per day without additional fixed-cost spending.

 

After developing a quality local ecosystem and building national expertise, SATORP serves as a model for Saudi industry overall. In addition, thanks to the strong partnership with Total, Saudi Aramco continues to develop local skills by developing further downstream activities in line with the goals set out by Vision 2030.

 

 

CEO Interview

Benoît Chagué, Managing Director of Total Refining & Chemicals and Total Country Chair in KSA

 

What is the biggest advantage for the refinery being based in Saudi Arabia?

Although the oil market is a global one, location counts. Being next to Aramco’s production means that the pipelines run right outside of our fence and crude oil is delivered to our gate dependably and reliably. Unlike many refineries around the world that have to buy their oil on the market, our Saudi refinery was tailored to the local heavy crude coming from the largest oil fields in the world. Having one feedstock allows for stability and optimization without having excess capacities on the units. Refineries that buy from market have to construct large tank farms to secure their own supply, but more importantly they have to continuously adjust their processes to ensure that their products meet certain standards despite having different sources of feedstock.


By simply using the latest state-of-the-art equipment available and optimizing our internal processes, we were able to boost production from 400,000 to 440,000 barrels per day. Due to economies of scale, we cut the processing cost of every barrel of crude oil that we refine at SATORP. On the other side, Saudi Aramco is building a trucking facility to incentivize sales to the local market. SATORP is also producing petrochemical products which allow the Kingdom to supply more local converters and manufacturers, our customers. An utmost advantage is obviously the quality of our partner Saudi Aramco, both for the quality of its management and workforce in developing new projects and for its ability to work as one team in our partnership.

 

Have you identified any possible future expansions for SATORP?

We are currently studying projects for future expansions with further debottlenecking of the refinery and also by working with both current and potential future partners for SATORP downstream development. This will be in the petrochemical space, a growing field in the Kingdom and in the region overall, as demand for both basic and specialty petrochemical products continues to rise.

 

How would you rate the capabilities of the Saudi talent you have encountered since entering the Kingdom?

We have been impressed by the quality and skills of the Saudi workforce. The Kingdom has excellent universities and training programs abroad and, through Saudi Aramco, it provides huge support to international partners that are looking to invest here. Management skills in particular have been impressive.

 

In terms of capacity building, the speed and scale of Saudi Aramco’s downstream developments in the last five years are incomparable. All of their plants are world-class units despite being newcomers to the industry. Naturally, achieving so much at such a rapid speed needs strong international partnership and expertise, but these skills are quickly transferred to Saudis. Overall, Saudi Aramco’s biggest strength is in finding the right partners and creating the right deal to make all parties committed to keep investing locally. Although our Saudization rate in SATORP is already at 70%, we see it as a duty to increase it further and will continue to work on that.

 

The ecosystem of local contractors and service providers is also to world-class standards. We have just completed our first turnaround now; this is the time when the plant partially shuts down as we perform maintenance on the equipment. Throughout this process we have had the opportunity to hire local companies and were again impressed by the local capacities that the Kingdom had built up as a refining country. The reliability of the facility depends on both the operation and the quality of the maintenance and this first turnaround was a very positive experience in all aspects: a high quality job was done, with an excellent safety record and within budget and timing. More than 1.2m ManHours were worked and there was a peak of 4500 people on site during the turnaround.

 

What investment opportunities in Saudi Arabia do you see as the most promising?

Investors should focus on the industrial clusters as opportunities. Through the National Industrial Cluster Development Program, the government has already done all of the necessary feasibility studies that highlight where Saudi Arabia can excel and what potential exists. These clusters include chemicals, mining and metals, pharmaceuticals and automotive manufacturing, in addition to others. Government support also makes them the most promising investments possible given the current climate, available resources and designated land. International companies that can form strong local partnerships with customers and suppliers should seize the opportunity. Through the cluster program investors can benefit from the best access to both suppliers and the growing regional market. In our experience, forming an equal partnership has been the optimal approach; our subsidiaries have managed to be successful thanks to the support they received from both Total and our Saudi partners.

Global presence
Over 130 countries
Date of establishment globally
1924
Date of Saudi market entry
Crude off-take agreement signed with Saudi Arabia in 1974, Representation office opened in Dhahran in 1978
Annual revenue globally
2017 : Adjusted net Income $10.6bn; Operating cash flow (before working capital changes) : $21.1 bn
Annual revenue in Saudi Arabia
SATORP 2017 sales revenue of $9bn
Total investment in Saudi Arabia
$5bn
Saudization rate
69%
Female employment rate
4%
Percentage of local content achieved
Construction phase SATORP: approximately 25% , Production phase SATORP: approximately 100%
Total
  • Khobar, Jubail, and King Abdullah Economic City
    Location
    • Lubricant entity (STPP)
    • 440 kb/d refinery (SATORP)
    • Petrostar Aviation Co Ltd
    Operations
  • Integrated energy producer and provider
    Industry
  • 98,000
    Employees Worldwide
  • Total 145 (STPP, TRCSA Branch Office and Total secondees in SATORP); SATORP approximately 1100.
    Employees in Saudi Arabia
  • French
    Country of Origin
• “An utmost advantage is obviously the quality of our partner Saudi Aramco, both for the quality of its management and workforce in developing new projects and for its ability to work as one team in our partnership.”
• “We have been impressed by the quality and skills of the Saudi workforce. The Kingdom has excellent universities and training programs abroad and, through Saudi Aramco, it provides huge support to international partners that are looking to invest here.”
• “We have just completed our first turnaround now; this is the time when the plant partially shuts down as we perform maintenance on the equipment. Throughout this process we have had the opportunity to hire local companies and were again impressed by the local capacities that the Kingdom had built up as a refining country.”
• “Investors should focus on the industrial clusters as opportunities. Through the National Industrial Cluster Development Program, the government has already done all of the necessary feasibility studies that highlight where Saudi Arabia can excel and what potential exists.”
Benoît Chagué
Managing Director
Total Refining & Chemicals and Total Country Chair in KSA