Technip takes $80m hit on Yanbu project

18 April 2008
France's Technip has taken a $80m charge on the Yansab olefins plant at Yanbu, because of problems with sub-contractors.

Technip won a $1bn engineering, procurement and construction deal in 2005 from Saudi Basic Industries Corporation (Sabic) to build an ethylene and propylene cracker (MEED 13:5:05).

Technip president Thierry Pilenko says the charge arose from having to find a new local sub-contractor at short notice after the deal with its first sub-contractor collapsed. The charge was included in its 2007 results, but the details were not revealed until now.

"We had an agreement with some local construction companies and once the contract was awarded we realised they could not deliver or did not want to work on this project anymore," he says.

Technip found another local firm, but the cost tripled. "It was just more expensive," says Pilenko.

It is the latest sign that projects in the kingdom are under significant cost pressures.

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