Contract award, change of plans for Sahara PDH/PP

15 October 2004
US-based Foster Wheeler has been awarded the contract to provide project management consultancy (PMC) services to the local Sahara Petrochemical Companyon the project to build a polypropylene (PP) and propane dehydrogenation (PDH) plant in Jubail. The award follows a change of strategy at Sahara on how to proceed with the estimated SR 2,000 million ($533 million) project (MEED 11:6:04).

Under the PMC contract, Foster Wheeler will carry out project management, technical, and engineering services for Sahara and set up an integrated project management team at the company to assist in developing the technical and commercial scope and selecting an engineering, procurement and construction (EPC) contractor.

The award follows a new approach to the project at Sahara, which in October 2003 appointed US-based Jacobs Engineeringto carry out preliminary PMC services and signed four memoranda of understanding (MoUs) for the project with Europe's Basell, the US' UOP, Germany's Lurgiand Italy's Tecnimontfor technology transfer, equity positions and EPC contracts (24:10:03).

However, Lurgi and Tecnimont, which carried out front-end engineering and design (FEED) work and cost estimations for the project, will not act as Sahara's EPC contractors after the expiry of the MoUs earlier this year. It is understood that Sahara's decision not to appoint Lurgi and Tecnimont was due to cost-related issues linked to the steep price rise in steel and other materials as well as the appreciation of the euro in the past 18 months. A source close to the project says Sahara instead opted for a 'fresh start' and to go ahead with competitive bidding for both the main PMC and the EPC contracts.

Following the latest PMC award to Foster Wheeler, the invitation to bid (ITB) documents for the EPC contract covering the PP and PDH units are now due to be released in mid-October. Technology will - as originally planned - come from Basell and UOP. Basell will provide its Spheripol PP technology for the project and will be the sole offtaker for the 450,000 tonnes a year (t/y) of PP to be produced at the plant. Sources close to the project say the offtake agreement with Basell is now expected to be signed by December. Basell is also expected to take an equity stake in the project.

The propylene feedstock for the PP plant will be sourced from the planned PDH plant, which will use UOP's Oleflex process. The PDH facility in turn will receive propane feedstock from Saudi Aramco. The project is due for completion in January 2008.

Banque Saudi Fransi is the financial adviser on the project. Sahara was established earlier this year by the local AH Al-Zamil Groupas a holding company dedicated to investing in the domestic petrochemicals sector. The company will also take a major stake in a planned olefins complex at Jubail (see over; MEED 10:9:04).

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