Green light on gas

Saudi Arabia

Philippe Peccard, president of Linde Middle East, talks to TOGY about Saudi Arabia as the leader in regional industry, new areas of focus for industrial gases and the company’s recent operations in the country. The firm is an EPC contractor for gas processing plants as well as an investor and operator of industrial gas facilities, and works in Saudi Arabia through its several local subsidiaries including Linde Arabian Contracting.

Linde’s first company in Saudi Arabia was established in 1984. Globally, around 85% of the company’s revenue comes from the production of industrial gases, including oxygen, nitrogen, argon, helium, hydrogen, carbon dioxide and carbon monoxide. For long-term contracts, Linde delivers gases through pipelines instead of the trucks and cylinders that it uses for smaller orders. Today the Linde’s companies are located in Khobar, Dammam and Jubail Industrial City, next to its major clientele.

• On the necessity of industrial gases: “Whenever you look at manufacturing and production in general, there is a need for industrial gases, in large or small quantities. The energy sector is one of Linde’s most important markets in term of gas volumes and growth.”

• On hydrogen and carbon dioxide in the country: “In regard to hydrogen and hydrogen mobility, the kingdom has a key card to play. Already existing technologies will allow it to produce, transport and distribute large volumes of hydrogen, using oil as a main feedstock for the hydrogen production. Co-produced carbon dioxide can be captured and possibly used for enhanced oil recovery, which might allow more oil production.”

Peccard also talks about using industrial gases for use in EOR in Saudi Arabia’s fields. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Philippe Peccard below.

Do you think Saudi Arabia will remain the biggest player in the Middle Eastern industrial gas sector?
Absolutely. In the energy, refining and petrochemical businesses, the Saudi approach to the market is probably the most modern in the Middle East. If you understand where Saudi is going with new developments and projects, you will understand where the overall region is going.
It is clear that Saudi is a precursor [for others] in some critical domains looking at creating more value and jobs in the kingdom. For example, you can see the ambition and great effort in Jubail, Yanbu and Rabigh to develop the downstream chemical value chain.
If you look at the population, the domestic market and the resources, not only in oil and gas but also in minerals, along with the vision and political ambition, there is absolutely no doubt that Saudi plays a major role in the region and is showing the direction.
Saudi is a country that is leading in real innovation. This includes the great efforts by the big companies to develop their R&D resources, portfolio and success at a level comparable to best-in-class. Another example of such innovation on a big scale is the proposed Saudi Aramco and SABIC [Saudi Basic Industries Corporation] oil-to-chemicals project. This mega-project, though still in its development phase, is a flagship project for the Middle East. If the project proves successful, this will open up a lot of investment and market opportunities for the whole Middle East.

How important are specialised gases to Linde and the energy industry?
About 85% of Linde Group’s revenues are generated by its industrial gas business, which means that Linde invests and operates gas facilities to supply millions of customers in 100 countries. Linde’s key markets for industrial gases include oil and gas, refining, petrochemicals, metallurgy, electronic, mining and many others.
Whenever you look at manufacturing and production in general, there is a need for industrial gases, in large or small quantities. The energy sector is one of Linde’s most important markets in term of gas volumes and growth.
Our business focuses on the production and supply of gases such as oxygen, nitrogen, argon and helium, as well as hydrogen, carbon monoxide, carbon dioxide and many others. We supply such gases using pipelines when large volumes are required, or trailers and cylinders for smaller volumes.
Linde also continues developing and providing to its customers a lot of technologies and applications, which are needed for our customers to optimise their production while using our gases.

How does Linde provide its products to major facilities?
For refineries and petrochemical plants that require large and continuous volumes of industrial gases such as hydrogen, oxygen or nitrogen, we cannot supply the demand with cylinders or trailers. Therefore, Linde typically invests in, constructs and operates gas facilities located next to the refinery or chemical plant and supplies the gas by pipeline on the basis of a long-term contract.
We then become an investor in part of the customer’s value chain. Sometimes we can be considered a co-investor in the customer’s project. Such investment projects are very capex-intensive. For example, Linde typically needs to invest USD 3 to generate USD 1 in revenue. This requires Linde to develop and maintain strong financial capabilities.

What other operations is Linde involved in?
We also have very strong technology-driven EPC functions, which operate under the Linde Engineering division of the Linde Group. Our technology, engineering and construction activities generate approximatively USD 2 billion-3 billion in revenues per year, with main customers in petrochemicals, chemicals and gas production.
Our technology portfolio includes best-in-class solutions for the production of olefins, natural gas, hydrogen and syngas, oxygen and nitrogen, and many other products related to gas processing.
In the Middle East, we have several successful references including, for example, the design and construction of the olefin plants of Borouge in Ruwais (phases I/II/III), the olefin plant of Tasnee in Jubail and several air separation units of SABIC Gas [National Industrial Gases Company].
Our solutions are competitive and successful when we can combine and offer a strong and sometimes unique technology solution with excellent engineering services. Our customers can confirm that, even if we are not always the cheapest on the market, our great value is in the technology solutions and the performance.

What works have you performed for Sadara Chemical Company’s new facility?
Sadara’s operations require a lot of industrial gases, especially carbon monoxide, hydrogen and ammonia, which for them are critical feedstock for the production of polyurethane and many other high-value chemicals which are part of the Sadara value chain.
In 2011, they held a public bid inviting all the big names for this type of technology and investment project and in 2012 they awarded this project to Linde on a build, own and operate basis. It is a long-term supply contract, which makes Sadara and Linde critical partners for the coming decades and most likely longer.
For this project, Linde financed, designed and built the plant 100% on the basis of Linde proprietary technology, and Linde operates the plant to secure the smooth, safe and reliable supply of industrial gases to the Sadara complex. Linde’s total investment for the project is in the range of USD 400 million, which makes it one of the largest of its kind in the region.
Our plant has been in commercial operation since 2016 and today we see the project as a great success in terms of the co-operation with Sadara as well as the performance during the construction phase. To give an example, the plant construction was completed on time with 10 million hours free of safety event (zero LTI). Sadara can rely on Linde as a key partner in their operations today and tomorrow. We will work together on handling any challenges and securing the long-term success of the complex.

What work is Linde doing with carbon dioxide in Saudi Arabia?
We are talking a lot with the big domestic players about technology in carbon capture, storage and utilisation. We are looking at technological developments in research and co-financing opportunities within and outside the kingdom.
Recently we successfully completed the design and construction for United in Jubail [Jubail United Petrochemical Company] of the largest carbon dioxide plant ever built globally. The plant allows United to purify carbon dioxide from its ethylene-oxide units and market this “pure” gas as a feedstock for the production of methanol.
Furthermore, we are interested in partnering with local players in developing new applications and in co-investing in production facilities and infrastructure in the kingdom, which will allow the large-scale and commercial-based utilisation of carbon dioxide. This might include new applications in the area of chemical and plastic production as well as enhanced oil recovery.

What other industrial gases are you developing in the country?
We work on carbon dioxide, but also on hydrogen. This is another domain in which Linde is very active in Germany, California and northeast Asia, and that we are undertaking to develop with strategic partners in the kingdom. We want to develop technologies that are applicable in Saudi Arabia to make hydrogen technology feasibility visible, for example for its utilisation in cars and trucks.
Our approach to the technology and market challenges is practical: start with existing and proven technologies to promote first projects for hydrogen mobility, then develop with strong partners the new technologies which one day will allow a fully renewable chain for mobility.
In regard to hydrogen and hydrogen mobility, the kingdom has a key card to play. Already existing technologies will allow it to produce, transport and distribute large volumes of hydrogen, using oil as a main feedstock for the hydrogen production. Co-produced carbon dioxide can be captured and possibly used for enhanced oil recovery, which might allow more oil production.
The kingdom is also blessed not only with oil, but also with sun. Solar energy is another large-scale source of energy which be used for hydrogen production.

To what extent are you involved in EOR?
We are not yet involved in Saudi in practical projects such as investing or supplying the technology for enhanced oil recovery, but this is something that we are have operations in outside Saudi.
For instance, in Mexico we own and operate the largest air separation unit in the world, which we are using to supply very large volumes of nitrogen to Pemex for enhanced oil recovery. We have been carrying this out successfully for more than 10 years together with Pemex.
Although this [enhanced oil recovery] technology is available, it does not work for every oil production [operation], as the reservoir characteristics might be different from one site to another, and we need to study what is best. Sometimes it is best to use carbon dioxide, sometimes nitrogen, sometimes other technologies. Today seawater is mainly used in oil production, but some new technologies, such as carbon dioxide for enhance oil recovery, might prove to be successful and required in the mid- to long term.

What is your company’s mission in Saudi Arabia and the region?
First we want to further develop in the kingdom as a key technology player in gas and some areas of chemical processing. We are providing technology and engineering solutions to the market on the basis of a very strong technology portfolio. We are keen on strengthening existing strategic partnerships and opening new ones in the kingdom to develop and commercialise new technologies and market applications.
Second and very important, we are ready to invest in the kingdom in new production facilities and associated infrastructure such as pipelines for the safe and reliable production of industrial gases. Such industrial gases are critical to the success of local industries and associated services.
Our target projects include investment for hydrogen, carbon monoxide, carbon dioxide and syngas systems. We have already started with our company Sigas, a regional leader for merchant gases, and with our major investment at Sadara.
Looking ahead, we see a lot of opportunities, especially in investing and operating new hydrogen systems. Here again we are keen to develop partnerships with local players to create additional synergies and regional champions.
Overall we see our mission in contributing with our technologies and engineering capabilities, investments and operations to the further development of the kingdom, focusing on gas processing, industrial gases and renewable solutions.

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