PIC / Dow Chemical Olefins II Ethylene, Kuwait


During the first half of 2003 Kuwait's Petrochemical Industries Company (PIC) and US-based Dow Chemical announced that they were to work together to build an ethylene and derivatives complex in Shuaiba, Kuwait.

The complex was an addition to the existing olefins complex, which started production in November 1997. The Olefins II Kuwait (OL2K) petrochemicals complex, commonly known as Olefins II, is based around a cracker producing 850,000t of ethylene per year. A 600,000t-per-year ethylene oxide (EO) / ethylene glycol (EG) facility was also built, and the annual capacity of the existing 600,000t-per-year polyethylene plant expanded by 225,000t.

Groundbreaking for Olefins II took place in March 2005. Construction of the project was completed in June 2009.

The petrochemicals complex is operated by Equate Petrochemical Company. It is owned by The Kuwait Olefins Company (TKOC), a joint venture between PIC (42.5%), Dow Chemical (42.5%), Qurain Petrochemical Industries Company (6%) and Boubyan Petrochemical Company (9%).

Adjacent to Olefins II, an aromatics project produces 450,000t of ethyl benzene / styrene monomer per year.The two facilities are integrated into a single complex and the production is marketed to the Middle East, Asia and Europe.

Project finance

"The complex is based around a cracker producing 850,000t of ethylene per year"

In 2002 international law firm Ashurst Morris Crisp was appointed to provide project finance advice to PIC for its aromatic and olefins projects.

The National Bank of Kuwait and Kuwait Finance House arranged a $600m bridge facility for Olefins II. The loan was arranged with the participation of 20 regional and international banks, including the Arab Bank Corp, Citibank, Gulf International Bank, HSBC, BNP Paribas, Arab Bank, Deutsche Bank and Standard Charters.

Project costs

The cost of the project is estimated to be about $3bn. Major expenditure on Olefins II is set to included $550m on equipment, $460m on bulk materials and $430m on construction

Ethylene contract

During April 2004, Technip USA announced that it had been awarded a contract to provide engineering services covering cracking furnaces and the recovery section of the ethylene plant. The plant is based on Technip's proprietary SMK cracking furnace technology was provided by Technip Claremont.

In July 2005 Technip announced that it had signed a memorandum of understanding for the construction of the ethylene plant. Technip's engineering centre in Rome, Italy, executed the contract, which included detailed engineering, procurement and supply of equipment and materials, construction and pre-commissioning.

EO / EG technology

Teh construction contractor for the EO / EG facility was Technip Engineering Centre in Rome. The plant is based Dow Chemical's Meteor process technology. Dow says that the technology reduces the mount of major equipment needed and the size of the plot required to build the plant, as well as providing environmental benefits.

"The petrochemicals complex is operated by Equate Petrochemical Company."

Utilities and infrastructure

At the end of June 2005, US-based Fluor Corporation announced that it had signed a memorandum of understanding to provide engineering, procurement and construction management services for the utilities and infrastructure portion of Olefins II.

During the final quarter of 2004 Fluor said that it was to carry out front-end engineering and provide overall project management services for the Olefins II Complex.

Tubular reactor

During the first quarter of 2005 India's Larsen & Toubro won an order to supply a tubular reactor system for the Olefins II project. The value of the order was put at $26m.

Electrical power transmission

During November 2005 ABB announced that it was awarded a contract to provide electrical power for Equate's Olefins II cracker complex. ABB said that the contract is valued at $27m. The project will take electrical power from the Kuwait grid to the Olefins II complex.

The contract is part of a $62m project awarded by Equate to an ABB-led consortium, which also includes Japanese cable manufacturer Exsym. The consortium is responsible for the design, construction and commissioning of a 275kV and a 33kV power transmission, control, protection and substation automation system.

Logistics support contract

At the beginning of 2006 Kuwait's PWC Logistics announced that it had been awarded the logistics contract for Equate's Olefins II ethylene and derivatives project in Shuaiba, Kuwait. The contract covered freight forwarding, customs clearance and transportation for a range of construction materials.

"The 600,000t-per-year facility uses Dow's Meteor EO / EG process."

Supervision of ethylene glycol plant

During the first quarter of 2006 Foster Wheeler was awarded the engineering, procurement and construction supervision contract for the planned Olefins II ethylene glycol plant. The 600,000t-per-year facility, which uses Dow's Meteor EO / EG process, became operational in 2009.

Background

During 1995, Union Carbide and PIC established a joint venture known as Equate, which produces petrochemicals in Kuwait. Union Carbide was subsequently bought by Dow Chemical and is now a wholly owned subsidiary. Each party holds a 42.5% stake in Equate, with Kuwait's Boubyan Petrochemical Company holding 9% and Qurain Petrochemical Industries the remaining 6%.

According to Dow Chemical, the Olefins II project builds on experience and expertise gained from Equate and also provides a basis for further cooperation between the two companies. PIC added that Olefins II fitted with its long-term strategy to expand its participation in the global petrochemical industry.

PIC is the petrochemical subsidiary of state owned Kuwait Petroleum Corporation.