Basell Joins Sahara For PDH/PP Plants & Other Saudi Chemical Ventures.

Basell has joined Sahara Petrochemical Co. (Sahara) in a SR 2,000m ($533m) project to have a propane dehydrogenation (PDH) plant and a plant to produce polypropylene (PP) built in Jubail. Sahara, controlled by the private Saudi firm AH Al-Zamil Group, has tendered the plants and Basell's share in this venture, proposed to be up to a third, will depend on the value of the EPC contract. Bids for the EPC contract are to be received by mid-February 2005 from companies like Tecnimont of Italy, Toyo Engineering of Japan and the German firms Lurgi and Linde. The project will produce 450,000 t/y of PP. The PMC is Foster Wheeler.

Sahara, controlled by the private Saudi firm AH Al-Zamil Group, was first planned to operate under the name Al-Zamil Petrochemical Co. (APC). However, APC was required to change its name under a law prohibiting the use of family names in publicly-listed companies. Sahara was established in early 2004. Its SR300m ($80m) IPO, representing 20% of its share capital, was 22 times oversubscribed. The sale was managed by the Consulting Centre for Finance & Investment.

Basell will provide its Spheripol PP technology for the project and will be the sole offtaker of the PP output. UOP of the US will provide its Oleflex technology for the PDH unit, which will receive propane feedstock from Saudi Aramco under a long-term contract.

Basell is also in advanced negotiations with three local firms - Sahara, Saudi International Petrochemical Co. (Sipchem) and National Petrochemical Industrialisation Company (Tasnee) - for a 25% share in a major olefins complex at Jubail. An agreement in early 2005 will include supply of Basell's high-density polyethylene (HDPE) technology. Basell is a 25% stakeholder in Saudi Polyolefins Company (SPC), another Jubail-based PDH/PP project, with Tasnee holding the remaining shares.

In April Fluor Daniel was selected as the PMC for the olefins complex, which will have an ethane cracker with a capacity of over 1m t/y as well as polyolefins units, which will include a 200,000 t/y PP plant. Negotiations are ongoing with potential technology providers. Bids for the cracker's technology supply and EPC contract are due in early January. Bids for the downstream units will be invited before mid-2005. The complex should be completed before end-2007. All the feedstock arrangements - ethane for the olefins complex and propane for the PDH plant - have been concluded with Saudi Aramco under long-term contracts.

Sipchem has a $2,000m investment programme, covering Phases 2 and 3 expansions at its Jubail petrochemical complex. Phase 1, a 1m t/y methanol plant, is to start-up in December, and a 75,000 t/y MAN/BDO unit is to be on stream in late 2005. Phase 2, for which Foster Wheeler is the PMC, will be on stream in 2008. It will add a 500,000 t/y acetic acid plant, which will feed a planned 300,000 t/y vinyl acetate monomer (VAM) plant and a second 1m t/y methanol unit.

Phase 3 will involve an ethane cracker with a capacity of at least 1m t/y. This should be on stream by 2009. The PMC for this will be appointed before end-2004. Phase 3 will also produce olefins. Sipchem has been negotiating with a number of international companies to come on board as JV partners, technology providers and offtakers. Agreements are expected before end-2004.

Tasnee in April 2004 entered into partnership with Acetex of Canada, to have a $1,000m complex in Jubail to produce 1,8m t/y of methanol, 500,000 t/y of acetic acid and 275,000 t/y of VAM. The JV has already secured the methane feedstock from Saudi Aramco under a long-term contract. Under the JV agreement, Acetex will provide its proprietary technology for the integrated production of acetic acid and methanol. The output will be used for export as well as for the production of VAM. The units are due to come on stream in 2007.

Acetex will sign a long-term methanol offtake agreement with the JV to cover its international methanol obligations. The Canadian firm is handling the marketing of the acetyl products, with offtake agreements being finalised. The JV will set up two project companies: a 50:50 venture for the acetic acid and VAM units; and a methanol producer, 75% owned by Tasnee, with Acetex holding the remainder. The venture's equity will make up 30% of the total project costs, with debt covering the remaining 70%.