Saudi Kayan Petrochemical Company, Saudi Arabia


During the first quarter of 2006 Saudi Arabia's Sabic announced that it had become a 'strategic partner' in the formation of a company called Saudi Kayan Petrochemical Company (Saudi Kayan). The new company is headquartered in Riyadh, Saudi Arabia.

Saudi Kayan is building a 6 million tpa petrochemical complex. Located in Al Jubail Industrial City, the complex is due to become operational in late 2009. By June 2009, about 94.21% of engineering works were completed. The average completion of construction, supply and engineering works is 78.3%.

The project is expected to be fully completed in 2010. The land for the complex was leased by the Royal Commission to Jubail and Yanbu for 30 years starting April 2007 at a nominal rent. Products will include 1.35 million t/y of ethylene and finished products such as propylene, polypropylene, ethylene glycol and butane-1 at 2.6 million t/y.

Downstream products will include aminoethanols, aminomethyls, dimethylformamide, choline chloride, dimethylethanol, dimethylethanolamine, ethoxylates, phenol, cumene, acetone and polycarbonate. Sabic says that these downstream products will provide a wider range of opportunities for downstream industries.

Finance

July 2006 saw Sabic enter into an agreement with BNP Paribas, Arab Banking Corporation and Samba Financial Group to act as financial advisers and lead arrangers for a loan of approximately $4.8bn for Saudi Kayan.

Sabic appointed Samba as its financial adviser and initial public offering (IPO) manager for Saudi Kayan's public subscription in 2006.

In May 2008, Saudi Kayan entered into a 15-year agreement with a group of regional and international financial institutions and banks for funding the construction of its new complex to the extent of $6bn.

"Kellogg Brown and Root (KBR) was awarded the contract to build Saudi Kayan's 1.35 million tpa ethylene plant."

Funds will be provided by ABN AMRO, HSBC, BNP Paribas, Arab Banking and Samba Financial Group. The export credit agencies are KEIC, ECGD, SACE and K-EXIM. Saudi Arabia's Public Investment Fund is also financing the project and Al Rajhi Banking & Investment is providing an Islamic working capital facility. The Saudi Industrial Development Fund provided a $533m loan to Saudi Kayan towards construction costs.

Sabic holds 35% in the company with Saudi Kayan holding 20%. The remaining 45% will be offered for public subscription.

Ethylene plant

Kellogg Brown and Root (KBR) was awarded the contract to build Saudi Kayan's 1.35 million tpa ethylene plant. The lump sum service contract will see KBR providing engineering, procurement and construction management on the plant. Front end engineering and design will take place at KBR's headquarters in Houston while engineering and procurement activities will be conducted in the company's Singapore office. The production unit will be located in Jubail City, Saudi Arabia.

Ethylene technology

KBR will provide its Selective Cracking Optimum Recovery (SCORE™) technology for the 1.35m tpa ethylene unit. KBR said the new facility will be the fourth grassroots cracker to use KBR's SCORE™ technology.

Off sites and utilities

During June 2006, Saudi Kayan Petrochemical Company signed a letter of intent with Fluor Company for the construction of off-site utilities.

Background

At the beginning of 2006 Sabic announced that it was planning to establish a partnership with Kayan Petrochemicals to build a worldscale petrochemical complex. An initial memorandum of understanding was signed in January 2006. As well expanding the range of products produced in Saudi Arabia, Saudi Kayan intends to establish an applications centre which will focus on the development of industrial products and applications.

Contractors

At the end of January 2007 Saudi Kayan Petrochemical Company awarded two contracts related to polyolefin units at its petrochemical complex to be built in Jubail Industrial City, Saudi Arabia.

"The project is expected to be fully completed in 2010."

The contract for a 350,000tpa polypropylene (PP) plant was awarded to Samsung Engineering, while Simon Carves won the contract for the 300,000tpa linear low density polyethylene (ldPE) plant.

The value of the contracts was not disclosed.

During February 2007 Saudi Kayan Petrochemical Company awarded contracts related to the construction of bisphenol-A (BPA) and polycarbonate units at its petrochemical complex, located in the Al Jubail Industrial City, Saudi Arabia.

Spain's Tecnicas Reunidas will be responsible for the construction of a 240,000tpa bisphenol-A facility, while Korea's Daelim Industrial will build a 260,000tpa polycarbonate unit. Process technology for the polycarbonate plant will be provided by Asahi Kasei. The value of these contracts was not disclosed.

The contract for general construction works such as civil, electrical, structural, piping and instrumentation was awarded to Mohammed Al Mojil Group in December 2007.

A three-year contract start-up programme for the complex was awarded to Shell Global Solutions in February 2008.

During June 2008 Singapore's Van Leeuwen Pipe and Tube announced that it had been awarded a contract to supply carbon steel, alloy steel and stainless steel pipes, fittings and flanges for the Saudi Kayan Olefins complex. The value of the initial contract is said to be in excess of $38m.