Saudi Kayan sets final bid date for Jubail plastics plant deal

21 December 2009

Petrochemicals producer asks firms for revised prices

Petrochemicals producer Saudi Kayan has set a deadline for revised prices on the deal to build a $300m plastics plant at Jubail on the kingdom’s east coast.

Saudi Basic Industries Corporation (Sabic), the petrochemicals giant which holds a 35 per cent share in Kayan and is in charge of the project, has asked the two engineering firms vying for the contract to submit bids by 20 December.

Taiwan’s China Technical Consultants Incorporated (CTCI) and South Korea’s Daelim Corporation first submitted commercial bids outlining cost structures for the deal in September, as did South Korea’s Samsung Engineering. However, Samsung withdrew when Kayan asked for revised prices in November (MEED 18:11:09).

The winning bidder will build a 300,000-tonne-a-year (t/y) low density polyethylene (LDPE) plant at Saudi Kayan’s existing petrochemicals complex at Jubail.

The deal to build the LDPE unit has a troubled history. In March 2007, the UK’s Simon Carves won a deal to build the plant. It completed engineering design work and most of the procurement on the scheme, according to a senior source close to the scheme.

But in the first quarter of 2009, Saudi Kayan retendered the scheme after a dispute with Simon Carves. The decision to retender the deal in December came after the prices submitted in September were more than the budget set by Sabic.

The company subsequently decided to enter into direct negotiations to get the best price possible. Al-Kayan Petrochemical also holds a 20 per cent stake in Saudi Kayan and the remaining 45 per cent stake is held publicly.

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