Technical bids in for $600m Sipchem project

19 October 2010

Bidders now have until 2 November to submit commercial proposals

Saudi International Petrochemical Company (Sipchem) has received technical bids for its planned $600m ethylene-vinyl acetate (Eva) unit joint venture at Jubail in Saudi Arabia, and is due to receive commercial bids by 2 November.

A source close to the project says an award of the engineering, procurement and construction (EPC) contract should be made by mid-December.

The facility will have a capacity of 200,000 tonnes-a-year of Eva when completed in the fourth quarter of 2014. Eva is used in the production of sports equipment and solar panels.  

The companies bidding for the EPC contract, all South Korean, are:

  • Daelim Industrial Company
  • GS Engineering & Construction
  • Hyundai Engineering & Construction
  • Samsung Engineering

Australia’s WorleyParsons is conducting the front-end engineering and design (feed) for the plant and will also carry out some project management duties. Sipchem owns 75 per cent of the project, with South Korea’s Hanwha Chemicals owning the remaining 25 per cent.

The project is part of Sipchem’s $4bn phase III expansion to its existing facilities at Jubail. Other projects planned include a methyl methacrylate (MMA) plant, an acrylonitrile and hydrogen Cyanide (HCN) unit and a polyacetal facility.

Sipchem’s planned $1.5bn mixed-gas cracker was scrapped due to spiralling costs. The company will now source ethylene and propylene from Saudi Arabian Basic Industries Corporation (Sabic).

The move was prompted by a lack of ethane in the kingdom. Sipchem had received the last ethane allocation from Saudi Aramco in 2007.

Sabic requires ethane so a deal was agreed where the company would supply Sipchem with ethylene olefin and propylene. The deal was struck in May 2009 after both companies agreed to co-operate in order to be able to better weather the global economic crisis in 2009.

Ankit Gupta, an analyst at Bahrain’s Sico Investment Bank says the profitability of the project will depend on the terms of the feedstock deal signed with Sabic.  “If Sipchem has negotiated a good price [with Sabic], then there is no doubt that this will give the company a price advantage in the market,” he adds.

Sipchem reported operating profits of around $47m for the third quarter of 2010 a two per cent quarter on quarter increase.

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