Egypt Hydrocarbon Corporation is in talks with the US export credit agency for the bank to provide guarantees on the debt tranche of its $2.5bn petrochemicals project on shores of the Gulf of Suez.
The Export Import Bank of the US (US Exim) could provide a guarantee for all $1.5bn of debt that will be required for the development of the project. A source close to the project says, “Talks with US Exim should be wrapped up by the end of December.”
The company has also recently signed an offtake agreement with US petrochemicals firm Vinmar for it to buy all of the polyethylene produced by the plant. An agreement with US Exim, coupled with the offtake deal, will pave the wave for the project sponsor to begin looking for bank funding for the development of the scheme.
Completion of the financing for the project is scheduled for late 2010.
The offtake agreement lasts 14 years, matching the expected tenor of the commercial bank loans. A source close to Vinmar says the offtake agreement covers around 1.35m tonnes of polyethylene a year.
The plant is being developed at Ain Sokhna. Further developments at the same site will include the construction of an ammonium nitrate pant, and a methanol plant. Egypt Hydrocarbons appointed the UK’s HSBC as financial adviser on the project in November 2008.
Also in November that year Egypt Hydrocarbons awarded a contract to the US’ KBR for it to design its two polyethylene units at the site (MEED 20:11:08).