Sipco mulls Yanbu LAB plant options

31 October 2003
Saudi Indo Petrochemical Company (Sipco), a joint venture between Bahrain-registered Gulf Petroproduct Companyand local investors, is considering an option to reduce the scope of its planned normal paraffin (n-paraffin)/linear alkyl benzene (LAB) plant at Yanbu to a LAB facility only. A decision on how to proceed with the project is expected by the end of the year, pending the outcome of negotiations with Saudi Aramco on the provision of kerosine feedstock for the grassroots plant (MEED 21:2:03; 7:2:03).

Sipco is considering a single LAB unit should Aramco's feedstock price raise the cost of producing n-paraffin above the international price. The company is already talking with potential suppliers to provide n-paraffin to meet feedstock demand for the 80,000-tonne-a-year LAB unit.

The integrated project was originally estimated to be worth about $230 million. However, if the n-paraffin unit is omitted, costs will come down to $120 million-130 million.

The front-end engineering and design (FEED) for the project is being carried out in-house by India's Tamilnadu Petroproduct (TPL), which is a 50:50 joint venture partner in Gulf Petroproduct with Saudi Offset Limited Partnership (SOLP). The appointment of a project management consultant (PMC) has been put on hold until the project's fate has been determined.

Financial close for the project, which is being financed through a combination of debt, equity and a $115 million Saudi Industrial Development Fund (SIDF) loan, is scheduled for the end of March 2004. Sipco's financial adviser is Apicorp Taylor-DeJongh Advisory Services.

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