Saudi Arabia’s $1bn Dammam 7 petrochemicals project has started basic design work ahead of releasing a tender for the plant’s full design and construction in the third quarter of 2011.

The engineering work is the latest sign the Jubail acrylic acid and acrylates complex is now starting to make significant progress since the scope was doubled in 2010.

“The basic design of Dammam 7 has started and 2011 is going to be an important year for this project,” says a source in Saudi Arabia. “If all goes well we will be seeing a tender by the late summer at the earliest.”

The source also confirms that the front-end engineering and design package of the project will be combined with the engineering, procurement and construction (EPC) contract.

“You will probably see engineering companies team up with EPC contractors in what will be a converted lump-sum turnkey contract,” the source adds.

The Dammam 7 project has been in the planning stage for about two years as the majority shareholder, the Bahrain-based Kanoo Group, tackled a number of issues, including securing feedstock and power, as well as financing.

The capacity of the planned plant is now 200,000 tonnes a year (t/y) of butanol and 400,000-t/y of acrylic acid, which will make it one of the largest plants of its type in the world (MEED 1:10:10).

Saudi Aramco will be providing gas, with the local/French joint venture Saudi Aramco Total Refining & Petrochemical Company (Satorp) providing the main propylene feedstock. Power will be provided by Power and Water Utility Company for Yanbu and Jubail (Marafiq).

The financing of the project is expected to come from a number of sources, including the Saudi Industrial Development Fund. About $670m expected to come from export credit agencies and commercial banks.

“The major obstacle for any project of this size that is not being developed by a state-owned company is the finance,” the source says. “This is definitely a viable project, but if all issues with finance get sorted out on time and the money is in place for construction then Kanoo will have done very well.”

Kanoo was not available for comment when contacted by MEED. The completion of Dammam 7 is expected to be late 2013 or early 2014.