Saudi firm takes stake in upcoming South Korea petchemicals plant

25 June 2018
Korean company, in which Saudi entity owns 30 per cent share, signs JV with local players to set up polypropylene plant

Saudi Arabia's Advanced Petrochemicals Company (Advanced) has announced that SK Advanced Company, a South Korean firm in which it owns a 30 per cent share, has signed an agreement to establish a polypropylene plant in the Asian nation in partnership with a local entity.

The other shareholders in SK Advanced are Kuwait’s state-run Petrochemical Industries Company and South Korea’s SK Gas.

The local entity in the proposed project is PolyMirae Company Limited, a 50:50 joint venture (JV) between South Korean engineering contractor Daelim and Netherlands/US-based chemicals firm LyondellBasell.

Jubail-based Advanced announced the proposed project to the Riyadh Stock Exchange (Tadawul) where it is listed.

The polypropylene plant, the specific location of which was not mentioned in the Tadawul disclosure, will have a design capacity of 400,000 metric tonnes a year (mt/y).

The project is estimated to cost $420m, 60 per cent of which will be financed by debt and 40 per cent by equity, with S K Advanced having 49.99 per cent ownership. However, the firm said that the total investment figure is under evaluation.

The new SK Advanced-PolyMirae JV expects to begin construction on the project in January 2019, subject to the final investment decision.

The plant is expected to commence commercial operations from 2021 and will be supplied by SK Advanced with locally sourced propylene as the main feedstock on a long-term basis.

Advanced expects the financial impact of the proposed investment by SK Advanced to be manifest in the company’s balance sheets after the plant begins commercial operation in 2021.

The upcoming project will be SK Advanced’s second in South Korea. The company has been operating a propane dehydrogenation (PDH) plant, which has a capacity of 600,000 mt/y of propylene, in the country since 2016.

PolyMirae operates four polypropylene spheripol production lines in South Korea with a total capacity of 700,000 mt/y.

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