Private player enters petrochemicals market with major olefins project

28 March 2003
Egyptian Arab Trading Company (Eatco) has announced the official launch of a $1,400 million polyolefins project on the Mediterranean coast at Damietta, eight months after the company was awarded a licence for the 550,000-tonne-a-year (t/y) scheme by the General Authority for Investment (GAFI). Eatco is in the final stages of forming a project company, Eatco Gas-to-Polyolefins (GTP) Company, and is finalising the terms of an offtake agreement with Vinmarof the US on a take-or-pay basis. The company is understood to have made an initial approach to the Petroleum Ministry regarding the terms of a natural gas feedstock agreement, and is understood to have approached a number of international companies about forming a strategic industrial partnership. Local investors have also expressed an interest in taking a stake in the project (MEED 7:6:02).

Lurgi and Linde, both of Germany, have been invited to participate in the project, which will entail using natural gas to make methanol. This will in turn be processed into ethylene and propylene, using methanol-to-olefins (MTO) technology developed by UOPof the US with Norsk Hydroof Norway. The end products of the polyolefins process, which will use technology licensed by Dow Chemicalsof the US, will be 300,000 t/y of polyethylene and 250,000 t/y of polypropylene.

Lurgi, which will oversee the MTO stage of the project, and Linde, which will oversee the polyolefins stage, are both expected to begin front-end engineering and design (FEED) work in early April. An engineering services and project management contract has been signed with the UK office of Jacobs Engineering. Eatco is negotiating the terms of an operations and maintenance (O&M) contract with Houston-based PTS and Jacobs. Lurgi is leading the EPC contract.

Dresdner Kleinwort Wasserstein is the financial adviser on the project. It is expected that the financing package will have a 70:30 debt/equity ratio. The debt portion is likely to comprise a combination of commercial bank and export credit loans.

The petrochemicals complex will be located on a 1 million-square-metre site alongside the liquefied natural gas (LNG) export facility being developed by the Spanish Egyptian Gas Company(Segas), in which Eatco has a 40 per cent equity stake.

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