Saudi Arabia’s petrochemical company has signed a deal with a South Korean conglomerate to build two chemical production plants valued at $1.8 billion in the kingdom.
The propane dehydrogenation and propylene facilities will be set up in Jubail Industrial City, with the capacity to produce more than 1.6 million tonnes of propylene and polypropylene every year.
Advanced Global Investment Company (AGIC`), a subsidiary of Saudi’s Advanced Petrochemical Company, signed a joint venture agreement with SK Gas Petrochemical, an affiliate of liquid propane gas importer SK Gas Co. in South Korea, to construct and operate the plants.
Work on the project will begin in 2021 and will be supplied with propane (main feedstock) from Saudi Aramco on a long-term basis, Advanced Petrochemical said in a bourse filing to the Tadawul stock exchange.
Commercial operations will commence by the second half of 2024.
AGIC will be the majority shareholder in the joint venture, accounting for 85 percent equity stake, while the remaining 15 percent will be owned by the South Korean partner.
Propylene is used as a base material in the chemical and plastic industries, while polypropylene is used in a wide variety of applications, including the manufacture of household items, packaging tray, plastic parts in the automotive industry and medical devices.
Between 2019 and 2024, the market for polypropylene is expected to grow at a compound annual growth rate (CAGR) of 5.56 percent, according to ResearchAndMarkets.com.
The growing demand for the product is fueled by the increasing usage of plastics and flexible packaging, among others.
“The high demand from the automotive and medical device industries is also expected to drive the growth,” the research firm said.
(Reporting by Cleofe Maceda; Editing by Mily Chakrabarty)
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