MOSCOW (MRC) -- Subsidiary AGIC and SK Gas have formed a joint venture named Advanced Polyolefins Company to work on the project, according to ConstructionWeek.
Saudi Arabian Stock Market-listed Advanced Petrochemical Company has signed a deal with South Korea’s SK Gas to construct and operate a propane dehydrogenation (PDH) and polypropylene (PP) plants in the kingdom’s Jubail Industrial City, with the project value being USD1.8bn (SAR6.8bn).
In a stock market missive the company said that its subsidiary Advanced Global Investment Company (AGIC) and SK Gas have formed a joint venture (JV), Advanced Polyolefins Company, which will work on the plants.
Together the plants will have a nameplate capacity to manufacture 843,000 tons per year (764,756.7 tonnes) of propylene and 800,000 tons per year (725,747.8 tonnes) of polypropylene.
According to the company, 25% of the finance for the project has been secured by equity from shareholders and remaining 75% will be financed by the newly formed JV, with borrowing from lenders.
AGIC will own 85% stake in JV, which will be financed by the parent firm Advanced Petrochemical Company, while the remaining 15% will be owned by SK Gas.
Additionally, AGIC has also signed a conditional land allocation letter with Royal Commission in Jubail 2 for the project.
Meanwhile, for the project, AGIC has also inked a license agreement with US-based Lummus Technology for the supply of CATOFIN Technology for 843 KTA PDH plant.
Two other license agreements have also been signed with Italy’s Basell Poliolefine Italia, for the supply of SPHERIPOL Technology and SPHERIZONE Technology for two PP plants with capacity of 400 KTA each.
Saudi Aramco will supply propane on a long-term basis for the project, project management consultants for which has also been selected.
Construction work on the plants is expected to being in 2021.
The company said: “The financial impact of the above investment is expected after the commencement of commercial operations of the project by H2 of 2024.”
As MRC informed before, in September 2019, SK Advanced signed a joint venture agreement with South Korea’s Polymerae Ltd. to establish a polypropylene plant in South Korea with an annual design capacity of 400,000 metric tons. The facility is expected to launch commercial operations in 2021.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC