Saudi Indo Petrochemical Company (Sipco) has shelved plans for a linear alkyl benzene (LAB) plant at Yanbu on the Red Sea coast of Saudi Arabia.

The decision comes after a feasibility study for the estimated $170m scheme concluded that it was not economically viable, according to a source close to the project.

“The project could be revived at some point, possibly in late 2011 or 2012, but not in this location. Abu Dhabi would be better given its proximity to the feedstock from Qatar”, says the source.

A feasibility study for the estimated $170m scheme concluded that it was not economically viable

Sipco had planned to build an 80,000 tonne a year (t/y) LAB unit at Yanbu, with output earmarked for the Middle East market. In 2004, the company dropped plans for an additional plant making the feedstock normal paraffin (n-paraffin) as a result of the high prices for its feedstock kerosene (MEED 18:2:05).

Instead, Sipco signed a 10-year supply agreement with Qatar Shell GTL, a joint venture of Qatar Petroleum and the UK/Dutch Shell Group.

India’s Tamilnadu Petroproduct  (TPL) was awarded the contract to carry out front-end engineering and design (feed) for the project and provide technology.

The Saudi Industrial Development Fund was expected to cover 48 per cent of the project costs. Bahrain-based Gulf Petroproduct Company and Saudi Offset Limited Partnership (SOLP) will each take 30 per cent stakes in the project company, with the local AH al-Zamil Group holding the remaining 40 per cent. Gulf Petroproduct is a 50:50 joint venture of TPL and SOLP.