Saudi’s Advanced Petrochemical, SK Gas to build plants worth $1.8bn
Subsidiary AGIC and SK Gas have formed a joint venture named Advanced Polyolefins Company to work on the project
Saudi Arabian Stock Market-listed Advanced Petrochemical Company has signed a deal with South Korea’s SK Gas to construct and operate a propane dehydrogenation (PDH) and polypropylene (PP) plants in the kingdom’s Jubail Industrial City, with the project value being $1.8bn (SAR6.8bn).
In a stock market missive the company said that its subsidiary Advanced Global Investment Company (AGIC) and SK Gas have formed a joint venture (JV), Advanced Polyolefins Company, which will work on the plants.
Together the plants will have a nameplate capacity to manufacture 843,000 tons per year (764,756.7 tonnes) of propylene and 800,000 tons per year (725,747.8 tonnes) of polypropylene.
According to the company, 25% of the finance for the project has been secured by equity from shareholders and remaining 75% will be financed by the newly formed JV, with borrowing from lenders.
AGIC will own 85% stake in JV, which will be financed by the parent firm Advanced Petrochemical Company, while the remaining 15% will be owned by SK Gas.
Additionally, AGIC has also signed a conditional land allocation letter with Royal Commission in Jubail 2 for the project.
Meanwhile, for the project, AGIC has also inked a license agreement with US-based Lummus Technology for the supply of CATOFIN Technology for 843 KTA PDH plant.
Two other license agreements have also been signed with Italy’s Basell Poliolefine Italia, for the supply of SPHERIPOL Technology and SPHERIZONE Technology for two PP plants with capacity of 400 KTA each.
Saudi Aramco will supply propane on a long-term basis for the project, project management consultants for which has also been selected.
Construction work on the plants is expected to being in 2021.
The company said: “The financial impact of the above investment is expected after the commencement of commercial operations of the project by H2 of 2024.”