SAUDI ARABIA - Divided Zone Mega-Venture.

Al-Khafji Joint Operations, a 50:50 JV of Kuwait Gulf Oil Co. and Saudi Aramco's Aramco Gulf Operations working in the Divided Zone (DZ), was on Oct. 12 to receive a proposal for an integrated mega-project from a group of investors led by Kuwait Finance House (KFH). This calls for a petrochemicals plant, together with a power and water desalination plant on an island, in the DZ to use flared associated gas from the area.

With the exception of the power/water island, the firms involved in this venture and the configurations are the same as for an integrated petrochemicals, power and water complex planned in Bahrain. The proposed facility will produce 315,000 t/y of ethylene dichloride (EDC), 167,000 t/y of caustic soda, and 30m gallons/day of desalinated water. The main difference to the Bahrain JV is the amount of power will be 200 MW, as opposed to 1,000 MW.

The firms involved are Shaw International of the US for the ethane cracker, Uhde of Germany for the EDC and caustic soda, Chicago Bridge & Iron (CBI) of the US for the gas separation unit and Weir Int'l of the UK for the desalination plant. Rolls-Royce of the UK will build the power island. On the Bahrain project, Siemens of Germany is said to have replaced the General Electric (GE) of the US for the power element, after the quotation submitted by GE came in well over the client's budget. KFH is said to be looking for an engineering, procurement and construction management (EPCM) contractor for both projects.

A big number of private petrochemical and chemical factories have emerged in recent years as satellites for the major plants of the state-controlled Saudi Arabian Basic Industries Corp. (SABIC). The plants, producing basic petrochemicals, are JVs between SABIC and major international firms (see DT 15). SABIC ventures not mentioned in DT 15 include: National Industrial Gases Co., known as GAS and shared by SABIC and private Saudi interests, whose additional air separation plant at Yanbu' built by Linde of Germany went on stream in late 1999 to produce 30,000 normal cubic metres/hour of oxygen, about 50,000 ncm/h of nitrogen, 2,200 ncm/h of liquid oxygen and 3,200 ncm/h of liquid nitrogen; Saudi Iron & Steel Co. - Hadeed - a Jubail JV with Deutsche Entwicklung Gesellschaft of Germany, and Jeddah Steel Rolling Mill Co. - 100% owned by Hadeed. Hadeed has expanded in a project ready in 2000, with a 850,000 t/y rolling mill for flat products and a second unit raising its long product output to 3m t/y. Hadeed has had three new projects: a revamping of its galvanishing line, expansion of its hot mill and hot skin pass mill, and (3) a paint coating line for 150,000 t/y of flat products, and a 500,000 t/y rebar and wire rod mill.

The following private Saudi groups are the most active in the petrochemicals sector.

Saudi Venture Capital Group: Comprising 47 key Saudi businessmen, SVCG is in a 50-50 JV with ChevronPhillips Co. (CPC) which has a world-scale aromatics complex in Jubail. It is the first big private Saudi venture in aromatics. It was completed for test operations in April 1999 and inaugurated in February 2000. It can turn 480,000 t/y of benzene which is partly used to produce 220,000 t/y of cyclohexane, a feedstock to make plastics, and 70,000 t/y of gasoline. The $650m complex uses Chevron's Aromax technology to produce benzene. The cyclohexane is based on a process provided by Institut Francais du Petrole (IFP).

Currently called Saudi ChevronPhillips Petrochemical Co (SCPC), this is Chevron's first direct investment in Saudi Arabia since the kingdom's oil sector was nationalised in 1980. The complex uses gas supplied by Saudi Aramco. With preparations for the JV having started in 1993, the complex was built by Chiyoda Corp of Japan under a turnkey contract signed in February 1997. Basic engineering was done by Fluor Daniel of the US. SVCG was the first group of its kind to be formed in 1986 to invest in downstream projects promoted by SABIC and the Offset Investment Programme (see Vol. 61, DT No. 16).

In a major $3 bn expansion, SCPC is having a 1.2m t/y ethane cracker at Jubail. Parsons E&C, part of WorleyParsons of Australia, recently got the FEED job for this. Downstream units will be a styrene plant and an ethyl benzene facility. SCPC has secured financing support for this project from the Public Investment Fund (PIF) and from the Saudi Industrial Development Fund (SIDF).

Arabian Shield Development Co. (ASDC) in Jubail processes pentane byproducts from SCPC's aromatics complex. The plant has cost $40m, with ASDC owning 25% and the rest held by other investors. Philip Townsend and Associates has been in charge of marketing the output.

Saudi Int'l Petrochemical Co. (Sipchem) is having an acetyls complex built at Jubail to be on stream in the second half of 2008. This will have a 460,000 t/y plant to produce acetic acid and 50,000 t/y of acetic anhydride, and a 300,000 t/y VAM plant. Sipchem is developing the project in partnership with Helm Arabia, a JV of Helm of Germany and Thales of France.

Shortlisted contractors - including Oslo-based Aker Kvaerner, Fluor and Foster Wheeler, both of the US, and Lurgi and Linde, both of Germany - have until Oct. 31 to submit technical bids for the main process unit package. Commercial bids will be submitted by end-November. An award is expected by end-2005. The $250-350m EPC package covers construction of the acetic acid plant and the VAM plant. The job will be initially given on a cost reimbursable basis and converted into LSTK by the end of the second quarter of 2006. Eastman Chemical Co. of the US did FEED on the acetic acid/acetic anhydride units and will provide its in-house co-production technology, in addition to marketing all the acetic anhydride output. DuPont of the US will provide the technology for the VAM plant, with the FEED to be done by the UK office of Foster Wheeler, which is also the overall PMC.

The second package being tendered covers offsites and utilities (O&U) and construction of a 265,000-t/y carbon monoxide (CO) unit and purification plant, which will provide feedstock for the acetic acid unit. Lurgi, Linde and Aker Kvaerner have submitted technical proposals for the $175-250m EPC contract. Commercial offers are to be submitted in November, with an award expected by end-2005. The CO and O&U project is being developed by a JV of Sipchem and the local National Power Co. (NPC). Saudi Aramco is providing the feedstock for the CO plant. The local SA Kentz Company is the FEED contractor.

Sahara Petrochemical Co., a private Saudi-led JV, is having a polypropylene (PP) and propane dehydrogenation (PDH) plant built in Jubail to be on stream by early 2008, with capacities of 450,000 t/y each. Sahara in late September issued a letter of intent for this to a JV of Tecnimont of Italy and Daelim Industrial Co. of South Korea. Contract signing on the $610m EPC package, which will be given on a lump-sum turnkey (LSTK) basis, is expected in late October. Construction will take about two years. Foster Wheeler is the PMC.

Basell (BASF/Shell) will have a stake of 32-35% in the venture. It will provide its Spheripol PP technology for the PP and will be its sole offtaker. UOP of the US will provide its Oleflex process for the PDH unit, which will get propane feedstock from Saudi Aramco. Shaw International with Taiwan's CTCI, and a German team of Lurgi and Uhde submitted offers in mid-June for the work, which has a budget of about $550m.

Sahara, with Basell and local firms Sipchem and Tasnee Petrochemicals, is pursing plans to have a big olefins complex at Jubail. A JV of Linde and Samsung of South Korea has the $1.2 bn EPC contract to build the ethane/propane cracker, with tender documents for the high density (HDPE) and low-density polyethylene (LDPE) units expected soon.

Innovene, the petrochemicals and refining arm of BP, has approached the five-member ethylene club for construction of a 1.2m t/y ethane cracker as part of a $2 bn Jubail complex.

Al-Khamasiah for Industrial Development, grouping Saudi interests, is establishing a $2.53 bn company to operate a petrochemicals complex at Jubail. It will offer 40% of its equity to investors and has started negotiations with Saudi Aramco for the feedstock arrangements.

The project, covering 3m square metres in Jubail, is expected to be implemented with the help of an international partner. The complex should be commissioned in 2009.

Universal Petrochemicals Co., involving Phenolchemie of Germany, Herdilia Chemicals of India and Saudi investors, has a 260,000 t/y cumene plant in Yanbu' on stream since 2000. It uses benzene from Ibn Rushd's aromatics plant, one of SABIC's units (see DT 15). The plant uses UOP's Q-Max process. It exports most of its output, which is used to produce phenol and acetone for building materials, carpets, cosmetics and medicines.

Phenolchemie, the largest phenol producer in the world, takes the biggest portion of the output. Herdilia, having a new 100,000 t/y phenol plant at Dahej in the Indian province of Gujarat, lifts some cumene as well.

National Petrochemical Industries Co (Natpet) is a consortium including two major Saudi groups Alujain Corp. (the leader) and Xenel Industries. Natpet has a JV, called Teldene, with Basell which is having an integrated complex built in Jubail to produce 420,000 t/y of polymer-grade propylene based on propane dehydrogenation (PDH) technology provided by UOP. The first unit will be run by National Propylene Co. (Alfasel). This will yield 350,000 t/y of polypropylene (PP). To complex will be on stream in 2006. Saudi Aramco will supply the propane. Basell's Spheripol process will be used to produce all grades of PP resin. Basic engineering and designs for the complex have been done by Tecnimont of Italy, which now is the PMC and the EPC contractor for the PP plant. The PP is to be marketed in local and regional outlets, and internationally by Basell.

Teldene-2: The same JV of Natpet and Basell is to have a second complex in Yanbu' to produce 250,000 t/y of PP. This should be on stream before end-2005. The propylene feedstock will come from an adjacent Saudi Aramco-ExxonMobil Refinery Co. (Samref).

Alujain, a promoter of industries based in Jeddah, is involved in a wide range of businesses set up in parallel to SABIC's, but on a smaller scale. Another Alujain JV in Yanbu' is a 900,000 t/y iso-octane plant to be built with Noble Americas. This was proposed to replace a 900,000 t/y MTBE plant in Yanbu', Saudi Arabia's first such private venture called Tahseen which was to cost $415m. In 1997 Neste of Finland (now Fortum) and Ecofuel of Italy - the partners of SABIC in MTBE producer Ibn Zahr (see DT No. 15) - joined Tahseen with a 15% stake each. Iso-octane, like MTBE, is an antioxidant used in lead-free gasoline.

Xenel Industries is controlled by Khalid Alireza. Xenel has interests in petrochemicals and other downstream industries in the kingdom, as well as abroad - including a share in a power venture in Pakistan. Xenel has shares in the Saudi French Hydrocarbon Solvents Co., which has a 70,000 t/y plant in Yanbu' set up by Saudi investors and Total of France (10%).

National Polypropylene Co. (NPPC) is to have an integrated 450,000 t/y PDH/PP plant in Jubail on stream in 2006. NPPC is to buy propane from Saudi Aramco. Licencing deals have been signed with ABB Lummus Global for its Catofin PDH and Novolen PP processes. ABB is the PMC.

SIDF is providing part of the financing, with the rest raised regionally through Gulf Int'l Bank (GIB) - its financial adviser.

Saudi Polyolefins Co. (SPC), set up in late 2000 by National Industrialisation Co. affiliate National Petrochemical Industries Co. (NPIC) and Basell, has an identical 450,000 t/y PDH/PP complex in Jubail on stream since 2004. The PMC was Raytheon Engineers and Constructors. ABB provided its Catofin process. Basell provided the technology for the PP unit. The EPC contractor was a partnership of ABB and Samsung.

NPIC holds 75% in SPC, with Basell having 25%. Main NPIC shareholders include Saudi Pharmaceutical Industries & Medical Appliances Corp. (Spimanco) and Olayan Financing Co. SPC has bought a share in a 70-km pipeline which carries propane feedstock from Saudi Aramco's Ju'aymah plant, just north of Ras Tanura, to SABIC's propylene unit of Petrokemya in Jubail (see DT 15) which is adjacent to SPC's.

SPC is considering the possibility of having a unit at its complex to produce acrylic acid, which would reduce the volume PP for sale. There have been proposals for the complex to have units producing other propylene derivatives at a later stage.

The National Industrialisation Co. (NIC) was founded in 1985 to promote industrial development by the private sector. The most prominent NIC shareholder, with 30%, is Prince Alwaleed ibn Talal ibn Abdel Aziz, a leading business tycoon who from his mother's side is the grandson of Lebanon's first prime minister after independence, the late Riad al-Solh. NIC's CEO, Moayyed al-Qurtas, is a former SABIC executive who brought new ideas to NIC.

National Titanium Dioxide Co. (Cristal) has a plant at Yanbu' producing soda and other items for export since late 2001. A $40m expansion contract won in 1999 by Simon Carves of the UK included a dedicated chlor alkali unit producing chlorine being used in Cristal's downstream titanium dioxide process.

In October 2000 Kerr-McGee of Oklahoma City sold its 25% stake in Cristal to its partners, NIC and Gulf Investment Corp.

Arabian Industrial Development Co. (Nama), grouping 300 Saudi and other GCC businessmen, was set up in 1991 to invest in petrochemical JVs. SABIC has a 10% stake. The other main partners are the prominent A.H. al-Zamil Group of industries, al-Bilad Establishment, A.H. Algosaibi & Brothers, the Olayan Group and Abdel Wahhab al-Aujan & Bros.

Nama has a $130m plant in Jubail built by Kobe Steel of Japan and on stream in May 2001: 30,000 t/y of epichlorohydrin (ECH), 60,000 t/y of chlorine, 70,000 t/y of caustic soda and 30,000 t/y of calcium chloride. The process for ECH was licenced from Showo Denko of Japan.

ECH is the feedstock for Nama's 20,000 t/y epoxy resin plant in Jubail built by Mitsui Engineering & Shipbuilding under an EPC contract signed in December 1996. This is the first epoxy resin facility in the Middle East, completed in late 1998 with technology provided by Ciba Geigy along with the use of its Araldite trademark. Until May 2001, ECH used to be imported. Epoxy resins - now sold to the GCC, Iran, Turkey, Pakistan and Africa - are used for surface coating, powder coating, adhesives, and electrical and electronic encapsulation