Jubail Industrial City brings new value

Saudi Arabia

Ahmed bin Zaid Al Hussain, CEO of Royal Commission of Jubail, talks to The Energy Year about Jubail Industrial City’s financial viability and how it is aiming to integrate the downstream and upstream sectors. Royal Commission of Jubail manages the development of Saudi Arabia’s largest cluster for the petrochemical industry and energy-intensive industries.

This article is featured in The Energy Year Saudi Arabia 2023

How financially viable is Jubail Industrial City?
Jubail Industrial City is a new city, perhaps the largest new city in the world. It spans 1,028 square kilometres. Royal Commission of Jubail was given 100% full ownership of this large land area from the start (1976).
Financial viability for any new industrial town is measured in several key ways. One is by the specific return on capital to government sponsors and by the increase in value of all land retained in new town ownership. It’s also measured by how Jubail fulfils national economic and social objectives and by how sustainable the new economic activity is.
Jubail is a highly successful example of how a nation can use administrative innovation and long-term infrastructure spending to create sustainable economic activity where none previously existed. It is an early example of using previous waste (flared gas) to make something valuable (chemicals).
Jubail is part of a long-term move away from burning oil derivatives and gas for fuel towards higher-value uses. This trend has continued and is accelerating today. Jubail is also moving further downstream to extract even more value. Getting the big strategic questions right has been a key part of Jubail’s enduring success.
There were sceptics. Jubail was considered by some to be too big and too ambitious. An article in the New York Times in 1979 said it might be a “huge white elephant … forever dependent on foreign labourers and costing much more to run than it will ever earn.” The critics were wrong. Jubail is a thriving “green mammoth,” green environmentally and economically.
For commodity chemicals such as polymers of ethylene and polypropylene, Saudi Arabia’s global market share is the world’s largest, at 13.5%, and growing. The majority of this production comes from Jubail.
The number of investments that we currently have here, which include residential, commercial and industrial investments, are worth around USD 156 billion. The government has spent USD 20 billion on infrastructure to achieve this, meaning that every dollar that’s spent by the government attracts USD 8 of investment.
A major international consultancy has estimated that about USD 18 billion in profits are made each year by private sector companies that operate in Jubail. Over 80% of Jubail’s employees within our primary industry are Saudi nationals, and most are employed in highly skilled jobs.
Growth continues at a fast pace. Our J1 industrial area is full. Our J2 area is 80% committed, and in response to demand, we are planning a J3 area. USD 2.9 billion of private sector industrial projects are under construction. Further projects worth USD 41 billion are approved and undergoing engineering design. Even more are planned for the thousands of hectares comprising our upcoming J3 area.
Jubail Industrial City also retains ownership of almost all the land of its vast 1,028-square-kilometre area. The enormous value of all public and private investment is embedded in this retained asset.

How is Jubail Industrial City aiming to integrate the downstream with the upstream industry?
Our focus lies in integrating downstream industries with upstream operations right from the beginning. For example, Sadara is the world’s largest chemical complex, with 26 integrated manufacturing plants producing over 3 million tonnes of products annually.
Jubail’s PlasChem Park aims to further process Sadara’s downstream products into speciality chemicals and other downstream items. This initiative has been remarkably successful, with more than 80% of the secondary area of PlasChem Park already occupied by global leaders.
The Amiral project involves integrating the existing SATORP refinery with a mixed-feed cracker that will produce 1.65 million tonnes of ethylene per year and will include two polyethylene lines with capacities of half a million tonnes each per year. The cracker’s total cost amounts to USD 6 billion, with additional investments allocated for downstream components.
Construction began in 2023, and the planned operational date is set for 2027. The downstream industries will be integrated into the Amiral project right from the start.

What role will Jubail play in helping Saudi Arabia achieve its net-zero targets?
The potential for storing captured carbon near Jubail in a cost-effective manner is enormous. Moreover, stored CO2 can also be a valuable feedstock. Jubail can create value by using solar power and captured CO2 to produce green hydrogen, green ammonia and green synthetic fuels. Jubail can also make a large contribution to the solar power demanded. Jubail is developing plans in J3 for up to 7,000 hectares [70 square kilometres] of solar generation.
By 2027 Jubail is scheduled to have the world’s largest carbon capture and storage project. In its first phase, up to 9 million tonnes will be captured from Jubail’s industry and collected in a special dedicated CO2 pipeline and piped to oil wells no longer in use for permanent storage.
This is especially cost effective for Jubail. Our industrial areas already have a pipeline network with racks and sleepers where the CO2 pipeline will be developed, and we also have old wells for storage nearby. These conditions at Jubail are excellent for potentially developing at scale one of the industries of the future – direct air capture of CO2.

What are Jubail Industrial City’s main targets for the coming years?
To support our national objectives outlined in Vision 2030, we face challenges but also many opportunities. The path forward is not as daunting as when we started in 1976. We now have a solid foundation of skills, infrastructure and business success to build upon.
Our focus is on developing J2, which includes the PlasChem and Amiral projects, which together represent a total capital expenditure of USD 34 billion. Our aim is to integrate the downstream chemical industry from the outset to optimise the efficiency of the value chain through colocation.
Our future industrial model plans to introduce innovative green value chains that produce green ammonia, green hydrogen and synthetic fuels using green energy and captured carbon as feedstock. Jubail has even initiated a hydrogen fuelling station for hydrogen-powered vehicles. This is the first step towards an extensive network.
We are also reserving space for further developments in light industry, support industry and services.
To complete the value chain and extend it to final products, we have taken the significant step of starting car production in Jubail with SNAM. Although our car production industry is relatively small compared to our chemical cluster, it represents a crucial move towards manufacturing sophisticated consumer products and diversifying our downstream capabilities.
In our sister city of Ras Al Khair, we will also establish one of the largest shipyards in the world to produce ships and rigs. This final product will be supported by value chains for parts and feedstock. For example, we are constructing a blast furnace to create the necessary plate steel. Paints and coatings will naturally be supplied from Jubail.

How can a petrochemicals cluster be a part of the circular economy?
We remain committed to effectively identifying opportunities for utilising waste materials and wasted energy. To facilitate this, we have established hydrogen and steam networks that enable the transfer of surplus resources from one industry to another in need.
Sadara operates a waste-to-energy plant, which efficiently produces steam for its own use and that of its downstream partners. A further example of our effort to create a circular economy is we are the nation’s first biodiesel manufacturer using recycled cooking oils.
In Jubail and our sister city, Ras Al Khair, which is located 100 kilometres to the north of us, we aspire to develop an efficient circular economy. According to a major international consultancy, 18 of the 20 raw materials required for a car’s body, chassis and interior are already produced in a final or near-final form within the Jubail and Ras Al Khair industrial complexes.
This unique advantage allows us not only to recycle but also to manufacture finished goods using recycled feedstock and supplemented raw materials sourced from nearby areas. This integration creates a world-leading, energy-efficient value chain that significantly reduces logistics costs and energy consumption over long distances.

What are Jubail Industrial City’s competitive advantages that can attract new investors?
We have a very low rate of rent per square metre of industrial land, USD 1.2 per square metre. This rate is among the lowest in the region, and the region’s rate is already very low. What makes Jubail unique is the way we manage the city and the fact that we have control over planning, investment, health and education.
We have an integration and sustainability committee made up of our industry CEOs, which increases our competitive advantage because the committee sees mutually beneficial cost savings. We also have great incentives from SIDF [Saudi Industrial Development Fund], which provides the city’s industry with loans.

What are some of the benefits of the city’s central planning strategy?
The approach was to create the world’s largest single construction project. We strategically built the longest pier to enable industries to pump products directly to deep-sea tankers, reducing costs.
Additionally, we established the world’s largest seawater cooling system, allowing industries to efficiently cluster together while preserving a beautiful coastline with accessible beaches. The quality of life in Jubail is very high. There are many parks and a clean environment, which is not what one normally associates with an industrial city.
The Royal Commission carefully considers the interactions between new investors and existing facilities to ensure the optimal location of new facilities. We focus on downstream expansion to promote product overlap and to explore recycling options. Integration with ports involves pipeline connections and upcoming train services. These will reduce truck use and emissions and improve road safety.
As a result, Jubail is the largest city with no traffic congestion and boasts an efficient petrochemical cluster that maximises pipeline transportation, leading to cost savings and notable energy efficiency per tonne of product produced and shipped.
Our central planning is part of being a “one-stop shop” for investors. We cover most investors’ needs. Furthermore, we have optimal land allocation where related industries and activities are collocated to reduce costs and logistics.

What is the Royal Commission of Jubail’s approach to education and training?
Education is a key focus for us, and our high-quality system attracts companies to establish here. We develop tailored training programmes for them. We train female technicians from Aramco through the Royal Commission, preparing them for the petrochemical industry. We have an upcoming university accommodating 18,000 students, and our present colleges and institutes boast an impressive employment rate of over 80%.
Students benefit from pilot training modules in real plant environments, which ensures knowledge and safety readiness. Jubail’s inclusion in the UNESCO Learning Cities Network highlights our commitment to education. Our research and development centre, located within the Royal Commission, contributes to innovation, along with other centres, including those of SABIC and Halliburton.

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