Dammam 7 investors put $1bn Jubail plant on hold

24 October 2011

Acrylic acid and acrylates plant in Jubail postponed

Saudi Arabia’s Dammam 7 Petrochemical Company has postponed until further notice the development of its $1bn Dammam 7 acrylic acid and acrylates petrochemicals project at Jubail.

The project, which has been in the planning stages for over two years, has suffered a number of delays in the past over issues such as financing, feedstock and power supply.

Saudi petrochemicals projects
Aramco Dow$18bn (est)EPC Tendering
PetroRabigh phase II$5bnEPC tenders released
Elastomers Project$2bnPrequalifying EPC
Dammam 7$1bnPostponed
EPC=Engineering, procurement and construction. Source: MEED Projects

“This project is not moving forward at the moment,” says a contracting source based in the Eastern province of the kingdom. “We have not been made aware of any specific timeline regarding the construction phase, but are not expecting any news regarding this in the near future.” 

Dammam 7 Petrochemical Company is owned by a group of Saudi shareholders led by the Eastern Province-based Yusuf Bin Ahmed Kanoo, sister company to the Dubai-based Kanoo Group.

In 2010, the company decided to double the scope of the plant to take advantage of economies of scale. This pushed the capacity of the plant to 200,000 tonnes a year (t/y) of butanol and 400,000 t/y of acrylic acid, which would make it one of the largest plants of its type in the world if constructed (MEED 1:10:11), accounting for about 5 per cent of global output.

“Increasing the capacity does make sense to the bottom line,” says the source. “But finding the $1bn to build the plant is going to be hard in today’s market without state backing.”

The propylene feedstock would have come from the soon-to-be completed local/French joint venture Saudi Aramco Total Refining & Petrochemical Company (Satorp), with gas coming from Saudi Aramco and the Power and Water Utility Company for Yanbu and Jubail (Marafiq) providing utilities.

Due to a domestic shortage, securing a gas allocation has been a problem recently in the kingdom. However, there are a number of non-associated gas projects under construction that will increase supplies for industrial usage by 2014-15. 

One of the problems for Dammam 7 in regards to finding finance might be the nearby $20bn Sadara Chemical Company complex. The massive joint venture between Saudi Aramco and the US’ Dow Chemical is also looking for finance for its project at Jubail.

In a statement to MEED on 19 October, Kanoo Group deputy chairman Mishal Kanoo said: “Kanoo Group is a small potential investor in the project.Whether Dammam 7 is able to raise finance or not is an issue for Dammam 7 and not the Kanoo Group nor Yusuf Bin Ahmed Kanoo. Kanoo Group and Yusuf Bin Ahmed Kanoo are seperate entities.”

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