Al-Zamil signs up partners for PP venture

24 October 2003
The local AH Al-Zamil Grouphas signed four memoranda of understanding (MoUs) with Europe's Basell, the US' UOP, Germany's Lurgi and Italy's Tecnimontto co-operate on a proposed polypropylene (PP) plant and a propane dehydrogenation (PDH) facility to be built at Jubail. The project will be promoted by a new joint stock company - Al-Zamil Petrochemical Company (APC). Al-Zamil is planning a number of other projects, including a new ethane cracker and polyethylene (PE) complex, which is expected to be carried out jointly with the local National Petrochemical Industrialisation Company (NPIC - MEED 20:6:03).

Under the first MoU, Basell will provide its Spheripol PP technology for the estimated SR 2,000 million ($533 million) project and act as offtaker for the bulk of the 450,000 tonnes a year (t/y) of PP to be produced at the plant. Sources close to the project say Basell will also take a major equity stake in the project company, to have capital of $400 million, in which APC will hold a 60 per cent stake. It is understood that other strategic partners will join Basell in taking an interest in the remaining 40 per cent of equity in APC.

The MoUs with Lurgi and Tecnimont are for the engineering, procurement and construction (EPC) contracts for the respective PP and the PDH units. The companies will over the next six months carry out the front-end engineering and design (FEED) work for the project. The UK's Jacobs Engineeringhas the contract to provide project management consultancy (PMC) services on the scheme. The project is due for completion in 2007.

The propylene feedstock for the PP plant will be sourced from the PDH plant, which will be built on a separate site and use UOP's Oleflex process. The PDH facility in turn will receive propane feedstock from Saudi Aramco.

The structure of APC will resemble that of Saudi International Petrochemical Company (Sipchem), another Jubail-based petrochemicals venture in which Al-Zamil is the leading shareholder (MEED 10:10:03).

APC is also preparing to set up two joint ventures with NPIC for the construction of an ethane cracker and a PE unit in Jubail. Feedstock arrangements have already been concluded with Aramco for the supply of ethane and propane. It is understood that bids have been invited by a November deadline for the contract to provide PMC services on the two schemes. Ethylene and PE technology providers have yet to be appointed. Both facilities are due to come on stream in the first half of 2007.

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