Jubail Acetyl Complex, Saudi Arabia

At the beginning of 2005 Saudi Arabia's Saudi International Petrochemical Company (Sipchem) announced that it had made a final decision to build an acetyls complex at Jubail Industrial City, Saudi Arabia. The complex will be made up of 460,000t/yr of acetic acid, 300,000t/yr of Vinyl Acetate Monomer (VAM), 50,000t/yr acetic anhydride and 265,000t/yr of carbon monoxide. The complex, known as the Jubail Acetyl Complex, is due to become operational during 2008.

PROJECT SPONSOR

Sipchem is a joint venture company established in 1999. The company has already invested in a methanol and butanediol capacity located in Al Jubail.

JOINT VENTURE AGREEMENT

During June 2005 a joint venture agreement was signed between Sipchem and Germany's Helm Arabia for the acetic acid and VAM plants. The agreement comprises a 25% stake in the project as well as long-term marketing and offtake rights to acetic acid and VAM sold outside the Middle East markets. Sipchem will market the products in the Middle East.

FINANCIAL ADVISORS

Saudi British Bank and HSBC were appointed by Sipchem as financial advisors to the project. The banks assisted in the financial structure of the project with a view to seeking bids from regional banks for project financing.

ACETYL CO-PRODUCTION TECHNOLOGY

During the second half of 2004, US-based Eastman Chemical Company announced that it had signed an interim agreement with Sipchem for the licensing of Eastman's proprietary acetyl co-production technology.

In addition to the technology licence, Eastman will provide technical support and market all acetic anhydride from the facility. The acetic acid will be used by Sipchem in the production of vinyl acetate monomer.

VINYL ACETATE MONOMER (VAM) TECHNOLOGY

The second half of 2004 also saw Sipchem reach a definitive agreement with DuPont to licence DuPont's technology for the 300,000t/yr VAM plant. DuPont will also provide technical assistance.

FEEDSTOCK

Long-term supplies of natural gas for the acetyls complex will come from Saudi Aramco, while methanol for the acetic acid production will come from Sipchem affiliate International Methanol Company (IMC). This methanol plant, also located in Al Jubail, became operational during the first quarter of 2005.

ACETIC ACID AND VINYL ACETATE PLANT CONTRACT

At the end of the first quarter of 2006 Sipchem announced that it had awarded Fluor Canada a contract for the construction of a 460,000tpa acetic acid plant, a 300,000tpa vinyl acetate plant and common utilities. Commercial operation of the Jubail Acetyls complex is due to begin in early 2009.

CARBON MONOXIDE FACILITY

Sipchem has selected Germany's Lurgi, in partnership with Air Liquide of France, for the construction of a carbon monoxide facility. The unit will have an output of 345,000tpa of carbon monoxide. Carbon monoxide is the primary feedstock for the production of acetic acid. The contract was awarded on a lump sum turnkey basis. The facility is owned jointly by Sipchem and Saudi Arabia’s National Energy Company.

PROJECT MANAGEMENT SERVICES CONTRACT

In the final quarter of 2004, Sipchem awarded the project management services contract for the acetyls complex to the UK's Foster Wheeler. Foster Wheeler is working as part of an Integrated Project Management Team (IPMT) alongside Sipchem. The role of the team is to develop and issue bid packages for the engineering and construction of the acetyls complex and its associated utilities and offsites. Once the contracts are awarded, the IPMT will manage the engineering and construction activities on behalf of Sipchem and its affiliates.

PROJECT TIMETABLE

Construction is due to begin during 2006, with the lump-sum turnkey contract due to be awarded at the end of 2005.

FINANCING

At the end of 2006 Saudi International Petrochemical Company (Sipchem) announced that three of its affiliates signed a combined project finance loan facility of $560m for the Jubail Acetyls Complex. The finance loan was signed with nine regional banks.

PROGRESS

Sipchem said that the project was progressing as scheduled with engineering work on the carbon monoxide plant about 45% complete. With a capacity of 345,000tpa it is said that the facility will be largest of its kind. The carbon monoxide plant will be owned by Sipchem and National Power Company, (Saudi Arabia).