Linde replaces Shaw for Egypt petrochemicals contracts

09 September 2012

The local Carbon Holdings plans $3.5bn petrochemicals plant in Suez

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
ProjectProductsStatusValue ($m)
Egypt Hydrocarbon Corporation1,050 t/d of ammonium nitrateUnder construction (due end 2013)454
Tahrir Petrochemicals1.35 million t/y of polyethylene and 600,000 t/y propyleneLoan application3,750
Egypt Japan Petrochemicals Company6,000 t/d methanol and 2,000 t/d ammoniaAwaiting gas feedstock decision2,300
Oriental Petrochemicals Company160,000 t/y of polypropyleneAcquisition expected to close in 2012120
Egypt Propylene & Polypropylene Company350,000 t/y propylene and 350,000 t/y polypropyleneAcquisition expected to close in 2012850
Egypt Basic Industries Corporation2,000 t/d ammoniaCompleted in 2008650
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.

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