PIC / Dow Chemical Olefins II Ethylene and Derivatives Complex, Shuaiba, 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, which is known as Olefins II, will be based around a cracker producing 850,000t/yr of ethylene. In addition a 600,000t/yr ethylene oxide (EO) / ethylene glycol (EG) will be built and an existing 225,000t/yr polyethylene plant will be expanded. Groundbreaking for Olefins II took place during the first quarter of 2005. Commissioning is scheduled for the first quarter of 2008.

Adjacent to Olefins II, an aromatics project is being planned which will include 450,000t/yr of ethyl benzene / styrene, 760,000t/yr of paraxylene (PX) and 325,000t/yr of benzene capacity.

PROJECT FINANCE ADVICE

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

PROJECT FINANCE

National Bank of Kuwait and Kuwait Finance House arranged a $600 million 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

Major expenditure on Olefins II is set to include $550 million on equipment, $460 million on bulk materials and $430 million 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 will be based on Technip's proprietary SMK cracking furnace technology which will be 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, will execute the contract which includes detailed engineering, procurement and supply of equipment and materials, construction and pre-commissioning.

ETHYLENE OXIDE / ETHYLENE GLYCOL TECHNOLOGY

A contractor for the EO/EG facility is yet to be selected, but the plant will be based on 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.

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 $26 million. It is said that the reactor will be one of the world's largest.

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 $27 million. The project will take electrical power from the Kuwait grid to the Olefins II complex.

The contract is part of a $62 million 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 covers freight forwarding, customs clearance, and transportation for a range of construction materials.

ENGINEERING, PROCUREMENT AND CONSTRUCTION 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 600,000tpa facility will utilise Union Carbide's Meteor ethylene oxide / ethylene glycol process and due to become operational in 2008.

BACKGROUND

During 1995, Union Carbide and PIC established a jv known as Equate which currently produces petrochemicals in Kuwait. Union Carbide was subsequently bought by Dow Chemical and is now a wholly owned subsidiary. Each party holds a 45% stake in Equate with the final 10% being owned by Kuwait's Boubyan Petrochemical Company.

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.