IN YANBU, a private joint venture is planning to build one of the world’s largest grassroots methyl tertiary butyl ether (MTBE) plants. The $415 million Tahseen venture, which will have production capacity of 900,000 tonnes a year (t/y), hopes to capitalise on a growing market for the gasoline additive. The biggest partner in the venture, the local Alujain Corporation, estimates global MTBE demand will increase to 23.7 million t/y in 2005 from 17.3 million t/y in 1995.
Tahseen will be established as a limited liability company with capital of SR 450 million-500 million ($120 million-133 million) and Alujain will own about 25-30 per cent. Ecofuel of Italy and Neste of Finland agreed in mid-November to take equity stakes of
15 per cent each.
The Arab Petroleum Investments Corporation (Apicorp) will have a 10 per cent stake. The remaining equity investment is being solicited from joint- stock companies in Saudi Arabia and the GCC with the help of Whinney Murray. Registration of Tahseen was scheduled for late 1997. Commissioning and start-up is scheduled 32 months later.
Long-term feedstock agreements – with Saudi Basic Industries Corporation (Sabic) for methanol and Saudi Aramco for butane – are being finalised. Ecofuel and Neste will each market some 350,000 t/y of the end product. Alujain will market the remainder.
Alujain has applied to the Saudi Industrial Development Fund for a SR 400 million ($107 million) loan to part-finance the project. Apicorp is providing financial advisory services on the scheme and helping to raise a commercial facility of just under $200 million, of which it will underwrite half.
Lump sum turnkey bids to build the plant were submitted in mid-1996 by US-based ABB Lummus Global, using its own technology; Stone & Webster Engineering Corporation of the US, using technology licenced from UOP; and Italy’s Snamprogetti, which proposed a combination of its own and UOP’s technology.
Snamprogetti is thought to have offered the lowest bid but no award has yet been made. Industry sources say teething troubles at a new Sabic MTBE facility built by the Italian firm may be part of the reason for the delay. Some have also speculated that it may be proving hard to find additional equity investors for the project. Neste and Ecofuel will provide technical support during the construction and early years of operation, and also comprehensive training for Tahseen’s employees.
MTBE production is highly feedstock-intensive – every tonne of MTBE needs three-quarters of a tonne of butane. Typically, the cost of butane accounts for 60 per cent of the total cost. Tahseen’s competitiveness will be helped by new technology and economies of scale. But it will also depend to a significant degree on obtaining low-cost butane. Whether Aramco will be able to keep up with domestic demand for gas liquids feedstock, particularly in Yanbu, is a matter of some concern to prospective producers.