Indigenization of Spare Parts and
Consumables used in the
Petrochemical Industries
Present by: Rajeev Chowdhry
Managing Partner – Alpha International Management Consultants
28th December 2009
PETROCHEMICAL INDUSTRY - SAUDI ARABIA
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An overview of the Oil and Gas and Petrochemicals Industry
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Products – Classified into various Categories
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Process Flows for Oil & Gas
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Capital Equipment and their types
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Spares and Consumables
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Observation and Inferences
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Petrochemical Industry in Saudi Arabia: A Snapshot
Hydrocarbons are the backbone of the Saudi economy
The single largest sector of Saudi Arabia’s economy is the extraction of crude oil
and natural gas (hydrocarbons), which accounted for 27 percent of real GDP in
2008. Petrochemicals provided 9 percent of GDP last year, up from 7 percent a
decade ago.
The dominance of the hydrocarbons sector extends well beyond its direct
contribution to economic output: hydrocarbons account for around 90 percent of
export earnings, and thereby provides the main source of revenue for the public
sector.
The petrochemicals sector offers one of the most promising long term
investment opportunities towards economic diversification in Saudi Arabia.
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Petrochemical Industry in Saudi Arabia: A Snapshot
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Petrochemical Industry in Saudi Arabia: A Snapshot
The Product Chain
Raw Material and Feedstock
Basic Petrochemicals
Crude Oil, Natural Gas, Methane,
Ethane, Propane, Butane, Naphtha
Ethylene, Propylene, Butadiene,
Benzene, Toluene, Xylene, Amonia
End Products
Intermediates & Derivatives
Plastics, Coolants, Cosmetics,
Pharmaceuticals, Fertilizers,
Packaging, Fibers, Paper, Textiles,
Lubricants…
MTBE, Methanol, Vinyl Chloride
Monomer, Mono Ethylene Glycol,
Polyethylene, Polypropylene etc
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Petrochemical Industry in Saudi Arabia: A Snapshot
Basic flow Chart for Oil Production
Refineries can range from simple topping plants with only a crude oil distillation tower to
the more complex refinery shown in the flow sheet.
CD – Crude Distillation Tower, REF – Reforming, FCC – Catalytic cracking, COK – Coking,
HYT – Hydrotreating, HR – Hydrodesulfurization.
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Petrochemical Industry in Saudi Arabia: A Snapshot
Basic flow Chart for Gas Processing
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Petrochemical Industry in Saudi Arabia: A Snapshot
What do the Petrochemical Companies produce
Feedstock and Petrochemical products produced
Methane
Ethylene
Propylene
Butenes and
Butadienes
Benzene
Toluene
Xylenes
StyreneButadiene
rubber(SBR)
Styrene
Benzoic acid
Phthalic
anhydride
Toluene
diisocyanate
Polyesters
Hydrogen
Polyethylene
Polypropylene
Ammonia
Ethanol
Isopropanol
Methyl tert-Butyl
Polystyrene
Ether (MTBE)
Acrobat Distiller 6.0 ME.lnk
Methanol
Ethylene
glycol
Propylene
glycol
Polybutadiene
Phenol
Polyurethanes
Dmethyl
terephthalate
Cumene
Caprolactam
Terephthalate
acid
Methyl
chloride
Vinyl acetate
Alkyl chloride
AcrylonitrileButadieneStyrene (ABS)
Carbon black
Perchloro
Ethylene
Acrylonitrile
Polybutenes
Aniline
Nylons
Polyethylene
terephthalate
Acetylene
Polyvinyl
acetate
Acrylic acid
Methyl ethyl
ketone(MEK)
Adipic acid
Polyureas
Dioctyl
Phthalate
Epoxy resins
Tert-butanol
Nylons
Formaldehyde Glycol ethers
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Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
The Oil and Petrochemical Industry have a huge array of equipment that it needs for
processing the feedstock into various end products. We give below a list of main equipment
that each of the stages need.
Oil Exploration and Pre processing
Drilling Rigs, Platforms, Well Head Equipment like Christmas Tree, Oil Pumping equipment,
Gas Oil Separation Plants.
Refining & Petrochemical Processing
De-salter units, Distillation Columns, Hydrotreater, Catalytic Reformers. Fluid Catalytic
Cracker. Hydrocracker, Visbreaking, Merox unit, Coking units, Alkylation, Dimerization unit,
Isomerization unit, Steam reforming unit, Gas treaters, Solvent refining units, Solvent
dewaxing units
ALL these are high end complex Plant and Equipment designed by the Process Patent
Holders and Technology Providers (OEM’s).
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Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
Specialized Equipment and Systems
Apart from the capital equipment, this Industry needs a lot of highly technical equipment and
systems which are designed for the specific highly critical application by highly specialized
manufacturers. We list the most important ones below:
 Heat Exchangers
 Electrical systems including Rotary Drives,
 Automation systems incl. Process Controllers
 Instrumentation Systems including Gauges
 Hydraulic and Pneumatic Systems – both prime movers and control systems
 Utility systems like Compressed Air
 IT based control and monitoring systems
 Safety equipment & systems
 Packaging, Shipment and Delivery systems incl. Automatic loading for liquids and batch
loading for solids
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Petrochemical Industry in Saudi Arabia: A Snapshot
What are the main Capital Equipment – Petrochemical Industry
Generic Equipment and Systems
Generic equipment that is used in this Industry, usually produced by local manufacturers and
some of them are actually built on site.
 Utility units such as Cooling towers, boiler plants and Water treatment Plants
 Buildings and shelters for the process equipment
 Technology Structural Steel Works both in Stainless Steel and Mild Steel
 Flare Stacks and Chimneys
 Liquid Product Storage units like Tanks, Spheres and Bullets,
 Solid Storage areas like silos
 Material Handling Equipment like Cranes, Stackers, Reclaimer etc.
 A variety of piping works including cross country piping for product transportation
 Lighting systems for the plant
 Fire Detection and Fire Fighting systems (for the plant)
 Security Systems
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Petrochemical Industry in Saudi Arabia: A Snapshot
Accessories and Spares Parts
The Petrochemical Industry needs a number of equipment and spares on a regular basis.
The total list is huge and so we have tried to group the most important ones as listed below:
 Drives and Rotary equipment like compressors, pumps, motors (both Electrical and
Hydraulic), Gear Boxes, actuators etc.
 Heat exchangers
 Valves – safety valves, control valves etc.
 Instrumentation like gauges, sensors, switches etc.
 Electronics and Automation spares
 Transformers, Circuit breakers and other Power Electrical Items
 Piping and lining material
 Cables of all kinds
 Paints, Solvents, Rust Inhibitors etc.
 Spare Parts for Generic Equipment
 Lights and other Illumination items
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Petrochemical Industry in Saudi Arabia: A Snapshot
Consumables
Apart from the Mechanical and Electrical equipment there are a number of consumables that
are used in this industry… once again, we try and identify a few important ones
 Drilling Mud, Cement and a host of other non metallic solids
 Catalyst – both new and processed
 Tubing, Linings and Refractory
 Chemical additives like Agitators
 Packaging Material
 Lubricants for various applications
 Column Internals like Sieves and Trays
 Tubing for boilers
Most of these items are supplied by trading companies who represent International
manufacturers in KSA
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunities
The list of possible equipment and spare parts that can be produced locally is very big and
we highlight the following 10 equipment, consumables and services. These items actually
find use across a broad spectrum of Industry.
 Fabricated Steel Products
 Valves
 Rotary equipment like pumps
We shortlisted 3 out of
these 10 items for a brief
study
 Gear Reducers
 Catalyst and Chemical additives
 Drives like Electric and Hydraulic Motors
 Standard Instrumentation parts
 Refractory and lining material
 Heat Exchangers
 Alloy Steel Castings and Forgings
 Hydraulic and Pneumatic Systems
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunities
The rational for selection of these 3 items was based on the highest demand from Saudi
Aramco’s estimate on expenditure it would make for various items between 2007 to 2012
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 1 : Fabricated Steel Products
This is one of most promising industries in the Support Sector in Saudi Arabia
and there is absolutely no doubt about the need for a Quality fabrication shop.
Local production capacities exist on the lower quality segment and the demand
and supply scenario changes drastically from year to year depending on the
projects released simultaneously.
The number of projects planned for 2010 – 2013, the industry will face a supply
squeeze unless new quality fabrication facilities are not set up.
Saudi Aramco averages nearly US $ 1.5 billion worth fabricated structures a year
and estimating that this value would be approx 40% of the total demand, the
market size for Structural Steel Fabricated structures would work out to almost
US $ 3.7 billion
In terms of tonnage, this would amount to approx 1.5 – 1.7 Million Tons /
annum
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 2 : Valves
Valves are devices that are used to either control, regulate or contain the flow of liquids,
gases, slurries, semi-solids or any other flowing material.
Valves can be broadly classified as follows:
Based on Application
Actuation
Construction
No. of Ports
Control Valves
Hydraulic Control
Single Port
Pressure Valves
Pneumatic Control
There are more than
50 types of
construction like Ball
type, Needle Valves,
Butterfly Valves,
Bibcock Valves, Leaf
Type etc.
Solenoid Control
Manual Levered
Double Port
Three Port – multi
Direction
Four Port – multi
Direction
Electric Motor Control
Spring Loaded
Thermostatic Type
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 2 : Valves
Each of these valves have specific applications and OEM companies specialize in different
ranges of these valves. Considering the local market, we recommend the setting up of a
plant for the manufacture of Pressure Valves as a first step.
Pressure Valves
The factory should produce Pressure Relief Valves for a variety of liquids and Gases and
should be designed and tested as per reputed international standards like ASME
Low
Pressure
Safety
Relief Valve
High
Pressure
Safety
Relief Valve
Pilot
Actuated
Safety
Relief Valve
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 2 : Valves
Manufacturing Facility
A comprehensive manufacturing facility would include a Steel and Alloy Steel foundry, a
Spring Manufacturing unit, a medium sized machine shop, a valve assembly plant,
necessary testing facilities and a painting area.
Machining
Centre
Assembly
Shop
Testing Centre
Painting
Booth
Plant
Overview
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 2 : Valves
With only Saudi Aramco planning to buy over US1
billion worth of valves each year, the market for
valves is huge and diverse.
Recommended way forward for Saudi SME
Investors is to form a Joint Venture with any of the
worlds leading OEM’s in this field, with an assured
off-take by the OEM.
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 3 : Pumps
Pumps are devices used to move liquids, slurries and gases from one
place to other.
Pumps essentially have the following components:
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A Casing or Body, within which the fluid is moved.
A drive or prime mover with or without a gear reducer.
A connecting shaft with coupling that connects the pump and the
drive
An impellor or ram which actually moves the fluid from the input port
to the discharge port
Seals and Bearing that ensure the whole assembly stays together
and operates smoothly without leaks
And finally the instrumentation and control panels
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 3 : Pumps
Types of Standard Pumps for common industrial uses
Impellor type single stage
centrifugal pump
Reciprocating pump
Vane type rotary pump
Diaphragm
type axial
pump
Multiple stage – Diffuser
type centrifugal pump
Reciprocating pump
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 3 : Pumps
Typical Production Facility
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Electric Arc Furnace / Induction Furnace facility for casting the valve bodies
Mould Shop for making moulds
Fettling and Cleaning facilities for castings
Machine Shops for machining of various parts like impellor shafts
Heat treatment facility for various items
Assembly shop for mechanical assembly
Electrical workshop for assembly of motors and drives
Shot Blasting and painting facilities
Testing facility
Maintenance workshops
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 3 : Pumps
Typical Production Facility
Machine Shop
Assembly Shop
Valve Testing Shop
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Petrochemical Industry in Saudi Arabia: A Snapshot
Investment Opportunity No. 3 : Pumps
We anticipate the market for valves to be over USD
1 billion/year, given the fact that Saudi Aramco by
themselves procure an average of US $ 680 million
worth of pumps each year. SABIC companies are
equally big users of pumps and if you add to that
the other big users like SWCC, SEC and other
Ministry of Water, the market size exists for a major
investment in this field.
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Petrochemical Industry in Saudi Arabia: A Snapshot
Inferences
 Oil and Petrochemical Industry spends billions of Saudi riyal each year
for procurement of Spares and Consumables and there exists a very big
opportunity for local investors to Locally Manufacture some of this demand.
The way forward recommended is to set up manufacturing plants in
Technology partnerships and Joint Ventures with reputed OEM’s, with clear
understanding on Technology Transfers and Training of local manpower,
then develop core engineering competence within a planned time frame
The Major Players in Oil and Gas Industry on its part “must” support any
new ventures by not only providing necessary technical assistance but
also getting into suitable “Take Off Agreements” with new Start – Up
companies, which will provide the necessary comfort to the local investor.
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Thank You!
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