Saudi petrochemicals project shelved

30 July 2015

Sabic reevaluates plans to build Jubail acrylonitrile plant after receiving bids

  • Three companies bid for $500m-$800m project
  • Bid bonds said to have expired
  • Project could be revisited in 2016

Saudi Basic Industries Corporation (Sabic) has shelved plans to build an acrylonitrile plant in Jubail, after receiving engineering, procurement and construction (EPC) bids on the petrochemicals project, according to sources close to the scheme.

Sabic planned to carry out the project with Japanese technology partners Mitsubishi and Asahi Kasei in a joint venture named Saudi Japanese Acrylonitrile Company (Shrouq).

The EPC contract was tendered in July 2014 and companies submitted technical and commercial EPC proposals in November 2014. New prices were submitted in late January.

The bid bonds on the tender are expected to have now expired.

“Sabic is conducting an internal evaluation on whether to proceed with the project,” says an industry source. “It has not been cancelled, but the contract will not be awarded any time soon.”

“Due to the overall situation of the market it seems like the project will not be realised until next year,” says another source.

Sabic was unavailable to comment on the status of the project, which is thought to have a budget of between $500m and $800m.

The three contractors bidding on the project were South Korean groups Daelim Industrial and Samsung Engineering, as well as Spain’s Tecnicas Reunidas.

Daelim carried out the front-end engineering and design (feed) study for the project.

The scope of work includes the construction of a 200,000 tonne-a-year (t/y) acrylonitrile plant alongside a 40,000-t/y sodium cyanide facility, and utilities and offsites.

Acrylonitrile is used as a binding agent to form products such as synthetic rubbers and polyamides. Sodium cyanide is a product used primarily in gold mining, as well as to extract other precious metals.

Sabic, Mitsubishi and Asahi Kasei announced a strategic partnership in April 2011. The project was set to make Asahi Kasei the largest acrylonitrile producer in the world, together with its other operations in Japan and South Korea.

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