Saudi Arabia Sustainable Aviation Fuel (SAF) Production Plant Feasibility Study, Market Opportunity & Investment Analysis

Executive Viability Abstract

This feasibility study evaluates the establishment of a 250,000 tonnes per annum (TPA) Sustainable Aviation Fuel (SAF) plant in Jubail, Saudi Arabia. Leveraging the Kingdom's low-cost renewable energy, proximity to major airports (RUH/JED), and strategic alignment with Vision 2030 and GACA’s environmental mandates, the project demonstrates a robust base-case IRR of 15.2% with a total capital requirement of $845 million.

## Executive Feasibility Thesis Saudi Arabia is uniquely positioned to dominate the Middle Eastern SAF market by leveraging its existing petrochemical infrastructure and unparalleled solar irradiance for green hydrogen production. The thesis rests on the 'Dual-Feedstock Strategy': utilizing domestic Used Cooking Oil (UCO) for immediate HEFA-pathway production while transitioning to Power-to-Liquid (PtL) using ultra-low-cost solar power ($0.015/kWh). With the General Authority of Civil Aviation (GACA) targeting a 2% SAF blend by 2030 and Saudi Arabian Airlines (Saudia) expanding its fleet, domestic off-take risk is significantly mitigated. The project aims to capture 15% of the projected 1.8 million TPA regional SAF demand by 2035. ## Technical Feasibility & Operational Specifications The plant will utilize the Hydroprocessed Esters and Fatty Acids (HEFA) pathway, the most commercially mature technology, with a secondary phase for Alcohol-to-Jet (AtJ). - **Location:** Jubail Industrial City II, providing access to Aramco’s hydrogen pipeline and port infrastructure. - **Capacity:** 250,000 TPA (approx. 75 million gallons/year). - **Feedstock Requirements:** 285,000 TPA of bio-oils (UCO, Tallow, and POME). - **Energy Input:** 45MW dedicated solar PV array for onsite electrolysis and auxiliary power. - **Operational Lifecycle:** 25 years with a 92% planned capacity utilization rate post-ramp-up (Year 3). ## Detailed Capital Expenditure (Capex) Total Estimated Capex: **$845,000,000** 1. **Pre-Development & Permitting ($25,000,000):** Environmental Impact Assessment (EIA), GACA certification, and front-end engineering design (FEED). 2. **Hydroprocessing & Fractionation Units ($310,000,000):** Unit cost of $1.24M per 1k TPA capacity. Includes high-pressure reactors and distillation columns for jet fuel/bionaphtha separation. 3. **Hydrogen Generation Unit (HGU) ($145,000,000):** PEM Electrolyzer system at $950/kW; necessary for the 'Green' SAF designation under CORSIA. 4. **Storage & Logistics Infrastructure ($95,000,000):** 6x 50,000-barrel storage tanks with specialized heating for high-viscosity bio-oils and pipeline connectivity to King Fahd Industrial Port. 5. **Site Utilities & Power Integration ($120,000,000):** Substation construction and 45MW solar farm installation at $0.80/Wp. 6. **EPC Management & Contingency ($150,000,000):** Fixed-fee EPC contract (12%) plus 8% physical contingency for global supply chain volatility. ## Realistic Operating Expenditure (Opex) Estimated Annual Opex (at full capacity): **$315,000,000** 1. **Feedstock Sourcing ($235,000,000):** Market rate for UCO/tallow at approx. $825/tonne. Long-term supply agreements reduce price volatility. 2. **Catalyst & Chemicals ($18,500,000):** Periodic replacement of cobalt-molybdenum and nickel catalysts; unit cost of $45k/ton. 3. **Labor & Human Capital ($12,000,000):** 180 full-time employees. Saudi National (Nitaqat) compliance focused on high-skill chemical engineering roles; avg. salary $65k/annum including benefits. 4. **Maintenance & Turnaround ($22,000,000):** Calculated at 2.5% of installed equipment value per annum. 5. **Renewable Energy O&M ($4,500,000):** Cleaning and maintenance of the solar field in high-dust desert environment. 6. **Regulatory Compliance & Testing ($23,000,000):** Continuous ASTM D7566 certification and CORSIA carbon intensity (CI) verification fees. ## Financial Model & Sensitivity Range on ROI/IRR **Core Assumptions:** - **Cost of Capital (WACC):** 8.5% (reflective of Saudi PIF-backed financing and local bank debt). - **SAF Premium:** $2,100/tonne (includes green premium over fossil Jet A-1). - **Taxation:** Zakat at 2.5% on the Zakat base; Corporate tax 20% (for foreign partners). **Sensitivity Analysis (IRR):** - **Base Case (Current Market): 15.2% IRR.** Assumptions: Feedstock at $825/t; Sales at $2,100/t; 92% utilization. - **Optimistic Case (High Subsidy/Low Feedstock): 19.8% IRR.** Assumptions: 10% reduction in feedstock cost via local collection mandates; Sales at $2,400/t due to EU RefuelEU export demand. - **Pessimistic Case (Feedstock Spike/Low Yield): 11.1% IRR.** Assumptions: Feedstock rises to $1,050/t; yield drops by 5% due to feedstock impurity; Sales at $1,850/t. ## Regulatory & Environmental Compliance Frameworks The facility must adhere to the **General Authority of Civil Aviation (GACA) Circular GSI-150-01** regarding aviation environmental protection. - **CORSIA:** Eligibility under the Carbon Offsetting and Reduction Scheme for International Aviation requires a minimum 10% greenhouse gas reduction; this plant targets 75%. - **Local Content:** Integration with the 'Shareek' program to maximize local procurement. - **ISCC PLUS Certification:** Mandatory for tracking the sustainability of bio-feedstock from collection point to final fuel delivery. - **Saudi Green Initiative (SGI):** Alignment with the target to reduce carbon emissions by 278 mtpa by 2030. ## Strategic Takeaways 1. **Feedstock Security is Paramount:** Success depends on securing long-term contracts for UCO; a joint venture with Saudi waste management firms (SIRC) is highly recommended. 2. **Energy Synergy:** The plant should utilize the surplus hydrogen from neighboring petchem plants during solar downtime to maintain 24/7 operations without relying on carbon-intensive grid power. 3. **Export Potential:** While domestic demand is growing, the highest margins are currently found in the European market due to the 'RefuelEU Aviation' mandate, making the Jubail port location a critical competitive advantage.