Euro-Japanese JV in line for Rabigh packages

19 August 2005
An Italian/Japanese joint venture of Tecnimontand Sumitomo Corporationis understood to be frontrunner for two of the three main process unit packages, covering the polyethylene (PE) units, on the estimated $8,000 million world-scale Rabigh refining and petrochemicals complex. The client, Rabigh Refining & Petrochemical Company (Petro-Rabigh), the recently formed joint venture of Saudi Aramco and Japan's Sumitomo Chemical Company, is expected to make a formal award soon. Contractor selection is also imminent on the remaining package, covering the mono-ethylene glycol (MEG) and propylene oxide (PO) units (MEED 29:7:05).

The first of the two PE packages, which together are estimated to be worth more than $1,400 million, covers the construction of the linear low-density polyethylene (LLDPE) and easy processing polyethylene (EPPE) units, each with capacity of 300,000 tonnes a year (t/y), and two 350,000-t/y polypropylene (PP) units. Sumitomo Chemical's own proprietary technology will be licensed for the units.

The second package involves the construction of a 300,000-t/y high-density polyethylene (HDPE) unit utilising technology licensed from Europe's Basell. Execution of both packages is expected to take at least two years.

Japan's Mitsui Engineering & Shipbuilding Company (MESC) and Spain's Tecnicas Reunidas, both in joint ventures with Sumitomo Corporation, are both understood to be in contention for the third package, which calls for the construction of the 600,000-t/y MEG unit train and the 200,000-t/y PO unit.

In an attempt to control escalating costs and reduce risk for contractors, which are faced with uncertainty over material and equipment prices as well as subcontractor shortages, Petro-Rabigh will initially sign the contracts on a cost reimbursable basis. They will be converted to lump-sum turnkey (LSTK) once most of the detailed engineering and procurement of some long-lead items is completed.

UK-based Foster Wheeler Energy, with its local partner Sofcon, is the overall project management services (PMS) contractor on the Rabigh programme. Sumitomo-Mitsui Banking Corporation (SMBC)is acting as financial adviser (MEED 15:7:05, Cover Story).

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