SIPC moves forward

16 November 2001

Saudi International Petrochemical Company (SIPC)is moving forward with plans to build a major petrochemical complex in Jubail, with the award of contracts to supply equipment for the methanol unit. The company is also approaching financial close on the butanediol (BDO) component of the complex, says Ahmed al-Ohali, the company's president (MEED 5:10:01).

Italy's Nuovo Pignonehas been selected by SIPC to supply two steam turbine compressors and Japan's Hitachi Zosen Corporationhas been selected to supply a methanol converter with a capacity of 2,900 tonnes a day. The methanol plant, which will have a capacity of about 1 million tonnes a year (t/y), is to be operated by SIPC's subsidiary, International Methanol Company. The 50,000-t/y BDO plant is to be developed by another SIPC subsidiary, Gulf Advanced Chemical Industries Company.

Contractors submitted initial bids in August for the lump sum turnkey (LSTK) contract to build the two plants, which are scheduled to come on stream in 2004. Japan's Chiyoda Corporation, France's Technip and South Korea's LG Engineering & Construction, in consortium with Foster Wheeler Italy, submitted proposals for the financial and technical elements of the contract. An award is expected in the first quarter of next year.

'We are moving forward with the BDO financing, which I hope will be completed before the end of the year,' says Al-Ohali. 'Because December is a difficult time, however, I think the financing for the methanol plant will go to the market only at the start of the new year.' The company has already secured funding from the Saudi Industrial Development Fund for the BDO plant and is making use of the advantageous terms offered by the British economic offset programme. It is being advised by the UK's Close Brothers Internationalon the offset element of the financing. Gulf International Bankis advising the company on the overall financing for the complex.

In addition to the BDO and methanol units, SIPC plans to build an acetic acid plant with a capacity of 275,000 t/y and a vinyl acetate monomer plant with a capacity of 250,000 t/y. An announcement about the third phase of the project is expected in early 2002. 'I'm afraid we can't yet say what the third phase of SIPC will be,' says Al-Ohali. 'But an announcement should be made in the first quarter of the coming year.' Industry sources say the company is looking at a worldscale ethane cracker. The company says it aims to have a production capacity of 5 million t/y by 2010.

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