Riyadhi
May 12th, 2007, 04:01 PM
Another mega project,
Saudi, Dow sign deal to build giant petchem plant
Sat May 12, 2007 8:43AM EDT
By Andrew Hammond
DHAHRAN, Saudi Arabia (Reuters) -
Saudi Aramco and U.S. Dow Chemical Co. announced on Saturday a deal to build a petrochemical plant that industry insiders expect to be the largest foreign investment in Saudi Arabia's energy sector.
The cost of the Ras Tanura plastics and chemicals complex would be "mammoth," said Saudi Aramco's President Abdallah Jumah, although he declined to give details.
Earlier this week, industry sources said the plant would have an investment cost of at least $20 billion. Costs have risen with soaring inflation in the energy industry from an Aramco estimate last year of around $15 billion.
Ras Tanura will be one of the biggest plants of its kind built from scratch, the two companies said in a joint statement from Aramco's headquarters in Dhahran.
"When fully operational, the new complex will be one of the largest grassroots plastics and chemicals production facilities in the world and will be ideally positioned to serve major world markets," the statement said.
Aramco and Dow signed a memorandum of understanding and will now enter a final negotiation phase for the formation of a joint company to build, own and operate the plant, the statement said.
The companies plan to float a 30 percent stake in Ras Tanura and raise the rest through debt, Jumah told reporters.
The investment is Dow's largest in the region and its biggest joint venture, said Chief Executive Andrew Liveris.
"We have other investments in the Middle East... but nothing rivals the scale, size and breadth of this project. (It is) the largest proposed joint venture in our 110-year history."
Dow is the largest U.S. chemical maker by sales and has faced tough competition from Middle East chemical producers such as Saudi Arabia's SABIC (2010.SE: Quote, Profile, Research that have access to cheap crude and natural gas. SABIC is the world's largest chemicals company by market value.
SABIC, along with other companies, was invited to bid for Ras Tanura but was unsuccessful, Jumah said.
DIVERSIFYING SAUDI ECONOMY
The world's largest oil exporter Aramco chose Dow last July to discuss the plant, which Aramco will supply from the nearby 550,000 barrels per day Ras Tanura oil refinery and Ju'aymah gas processing plant.
The petrochemical plant was scheduled for startup in 2012-2013, Jumah said. It will produce 4.5 million metric tons of basic chemicals and 7 million metric tons per year of derivative plastic and chemical products, he added.
Like its Gulf Arab neighbors, Saudi Arabia is making major investments to diversify its economy away from oil.
Oil Minister Ali al-Naimi said last week that a $70 billion investment program would make the kingdom the world's third largest petrochemical producer by 2015, up from its current ranking of tenth.
Saudi petrochemical output would rise to 100 million metric tons in 2015 from 60 million metric tons, and it would double the number of petrochemical products produced, Naimi said.
Aramco is also engaged in the PetroRabigh refining and petrochemicals joint venture project with Japan's Sumitomo Chemical. Jumah declined on Saturday to give an updated cost estimate for that project, last pegged at around $10 billion.
Aramco plans an IPO for at least 25 percent in PetroRabigh, but has yet to say when.
At the new Ras Tanura project, the key units are an ethane and naphtha cracker, a catalytic cracking unit and an aromatics unit. The units will help convert Saudi Arabia's heavy sour crude to high value plastics.
The project will feature more than 30 downstream process units, employ 4,000 workers and produce more than 300 different products. An industrial zone will be developed nearby, Jumah said.
www.reuters.com
Saudi, Dow sign deal to build giant petchem plant
Sat May 12, 2007 8:43AM EDT
By Andrew Hammond
DHAHRAN, Saudi Arabia (Reuters) -
Saudi Aramco and U.S. Dow Chemical Co. announced on Saturday a deal to build a petrochemical plant that industry insiders expect to be the largest foreign investment in Saudi Arabia's energy sector.
The cost of the Ras Tanura plastics and chemicals complex would be "mammoth," said Saudi Aramco's President Abdallah Jumah, although he declined to give details.
Earlier this week, industry sources said the plant would have an investment cost of at least $20 billion. Costs have risen with soaring inflation in the energy industry from an Aramco estimate last year of around $15 billion.
Ras Tanura will be one of the biggest plants of its kind built from scratch, the two companies said in a joint statement from Aramco's headquarters in Dhahran.
"When fully operational, the new complex will be one of the largest grassroots plastics and chemicals production facilities in the world and will be ideally positioned to serve major world markets," the statement said.
Aramco and Dow signed a memorandum of understanding and will now enter a final negotiation phase for the formation of a joint company to build, own and operate the plant, the statement said.
The companies plan to float a 30 percent stake in Ras Tanura and raise the rest through debt, Jumah told reporters.
The investment is Dow's largest in the region and its biggest joint venture, said Chief Executive Andrew Liveris.
"We have other investments in the Middle East... but nothing rivals the scale, size and breadth of this project. (It is) the largest proposed joint venture in our 110-year history."
Dow is the largest U.S. chemical maker by sales and has faced tough competition from Middle East chemical producers such as Saudi Arabia's SABIC (2010.SE: Quote, Profile, Research that have access to cheap crude and natural gas. SABIC is the world's largest chemicals company by market value.
SABIC, along with other companies, was invited to bid for Ras Tanura but was unsuccessful, Jumah said.
DIVERSIFYING SAUDI ECONOMY
The world's largest oil exporter Aramco chose Dow last July to discuss the plant, which Aramco will supply from the nearby 550,000 barrels per day Ras Tanura oil refinery and Ju'aymah gas processing plant.
The petrochemical plant was scheduled for startup in 2012-2013, Jumah said. It will produce 4.5 million metric tons of basic chemicals and 7 million metric tons per year of derivative plastic and chemical products, he added.
Like its Gulf Arab neighbors, Saudi Arabia is making major investments to diversify its economy away from oil.
Oil Minister Ali al-Naimi said last week that a $70 billion investment program would make the kingdom the world's third largest petrochemical producer by 2015, up from its current ranking of tenth.
Saudi petrochemical output would rise to 100 million metric tons in 2015 from 60 million metric tons, and it would double the number of petrochemical products produced, Naimi said.
Aramco is also engaged in the PetroRabigh refining and petrochemicals joint venture project with Japan's Sumitomo Chemical. Jumah declined on Saturday to give an updated cost estimate for that project, last pegged at around $10 billion.
Aramco plans an IPO for at least 25 percent in PetroRabigh, but has yet to say when.
At the new Ras Tanura project, the key units are an ethane and naphtha cracker, a catalytic cracking unit and an aromatics unit. The units will help convert Saudi Arabia's heavy sour crude to high value plastics.
The project will feature more than 30 downstream process units, employ 4,000 workers and produce more than 300 different products. An industrial zone will be developed nearby, Jumah said.
www.reuters.com