SAUDI Aramco says it has embarked on building three fully-transformative refineries at 400,000 barrels per day (bpd) each in the kingdom. Khalid Al Falih, Saudi Aramco’s president and chief executive officer, says the company is building the refineries in Jazan, Satorp, a joint venture with Total, and Yasref, a joint venture with Sinopec, in addition to building or expanding two world-class chemical complexes: Sadara complex, a joint venture with Daewoo Chemical and PetroRabigh complex, a joint venture with Sumitomo Chemical.

Al Falih says over the last three decades, the Gulf region has exported low-price petrochemical materials and imported a variety of technologies, instead of adding the maximum values for hydro carbonic material through more diversification and appropriation of products, a move that would have enabled the producers to establish secondary and specialised industries and produce export-oriented manufactures and semi-manufactured goods.

Saudi Aramco is also planning to enter the retail market by setting up gas stations fully owned by the company. The move comes as part of the firm’s strategy to become an integrated energy company that enters into more business ventures, including petrochemicals and the sales of refined products.

“We had already begun implementing this project by the end of last year,” the company’s annual report says.

Aramco has already received approval for establishing a fully owned company for retail services.

The new company is licensed to build, operate and maintain service stations in selected areas.

The company will not only run gas stations but also supermarkets and other services.

Saudi Aramco has also indicated that it could hand services other than fuel supply to potential partners who could add value to the company and its trademark.

Meanwhile, a key Chinese refinery project in the southwestern Yunnan province is “still progressing” despite the completion date slipping to 2016 and an associated petrochemical scheme being suspended, industry sources say.

The 200,000 barrel per day project in the city of Kunming, which is expected to be run by state giants China National Petroleum Corp (CNPC) and Saudi Aramco, is more than 20 per cent complete, an industry source says. The refinery has won regulatory and environmental approval from China and the construction is ongoing.

But the target completion date has slipped to end-2015 or early 2016, the source adds. A recent internal CNPC report notes the refinery as “delayed” and scheduled for completion in 2016. Aramco had expected that the facility to be completed in the second half of 2014 as recently as the middle of last year when it released its Annual Review 2013.

The delays are due to CNPC’s concerns about building too much refining capacity and oversupplying the market, Chinese sources say. CNPC and rival Sinopec have pushed back a number of downstream projects, several of which were supposed to be built with non-Chinese national oil companies, such as Aramco, Kuwait Petroleum International, Qatar Petroleum International, Venezuelan PDVSA and Russian Rosneft. CNPC predicts total refining capacity will reach 14 mbpd by 2015 and 16 mbpd by 2020.

Sources also say that a crude supply deal for Yunnan has not yet been completed between Aramco and CNPC. Aramco is expected to provide 28° API Arabian Heavy to the project.

One snag to inking the final crude deal could be the uncertain completion timeline of the Myanmar-China crude oil pipeline, industry sources suggest. The 440,000 bpd line would feed the Kunming refinery with Saudi crude.