Germany’s Linde has replaced US engineering firm Shaw Group on two contracts for a $3.75bn complex known as Tahrir Petrochemicals, to be located at Suez in the north of Egypt.
The contracts cover the lead engineering, procurement and construction (EPC) and technology provision, and Linde’s appointments come after a decision by the project’s main shareholder and developer, local petrochemicals firm Carbon Holding, to launch legal action against the US firm.
Carbon Holdings is seeking $465m because it claims Shaw failed to fulfil its contractual responsibilities in the development of the complex. The two companies had signed an implementation agreement in March 2010, which would have led to a full lump-sum turn-key (LSTK) EPC contract. This agreement was terminated in May this year by Shaw.
Linde will replace the US firm in a consortium with South Korea’s SK Engineering & Construction and the UK’s Petrofac, formed for the Tahrir Petrochemicals EPC contract. Linde will also now provide the cracker and recovery technology, replacing another contract previously held by Shaw, according to a source close to Carbon Holdings.
|Carbon Holdings Investments|
|Egypt Hydrocarbon Corporation||1,050 t/d of ammonium nitrate||Under construction (due end 2013)||454|
|Tahrir Petrochemicals||1.35 million t/y of polyethylene and 600,000 t/y propylene||Loan application||3,750|
|Egypt Japan Petrochemicals Company||6,000 t/d methanol and 2,000 t/d ammonia||Awaiting gas feedstock decision||2,300|
|Oriental Petrochemicals Company||160,000 t/y of polypropylene||Acquisition expected to close in 2012||120|
|Egypt Propylene & Polypropylene Company||350,000 t/y propylene and 350,000 t/y polypropylene||Acquisition expected to close in 2012||850|
|Egypt Basic Industries Corporation||2,000 t/d ammonia||Completed in 2008||650|
|t/d=Tonnes a day; t/y=Tonnes a year. Source: Carbon Holdings|
The agreement between Shaw and Carbon Holdings was cancelled shortly after France’s Technip agreed to acquire the chemicals division of Shaw. According to the lawsuit filed on 23 August, once Shaw Group began negotiating the sale of its subsidiary Shaw Energy & Chemicals, which was working on the Egyptian project, to Technip, “it had no intention of allowing Shaw Energy & Chemicals International to carry out its obligations under the implementation agreement [agreed with Carbon Holdngs]”.
Shaw could not be reached for comment.
MEED reported in July that Carbon Holdings was in advanced talks with financers for the complex. The company had planned to break ground in the second or third quarters of 2013 for a 36-month construction period. Mechanical start-up is scheduled for the end of 2016 and commercial production in 2017. It is now expected to be delayed by a year.
The planned Tahrir complex will include a 3.5-million-tonne-a-year (t/y) naphtha cracker. It will produce 1.35 million t/y of polyethylene, as well as 600,000 t/y of propylene, 210,000 t/y of butadiene and 420,000 of benzene.