NCP Olefins Cracker Project Start-Up Delayed, Targets 2Q
The start-up of the National Chevron Phillips (NCP) petrochemical project in Jubail has seen further delays and is now expected to begin operations sometime this quarter, MEES understands. The sponsors had originally been targeting the first quarter of 2011 and then the date slipped to the fourth quarter. It was delayed as a result of design issues discovered during commissioning and as a result extra safety measures that had to be implemented, MEES further understands. The project includes the construction of an olefins cracker and is expected to cost around $5bn to complete. It includes units to produce ethylene (1.15mn tons/year), polyethylene (1.1mn t/y), polypropylene (400,000 t/y), and hexene-1 (100,000 t/y).
The project’s holding company is Saudi Polymers Company, which is 35% owned by Arabian Chevron Phillips, and 65% by National Petrochem Company (Petrochem), with the latter traded on Saudi’s Tadawul exchange. Petrochem is 50% owned by Saudi Industrial Investment Group, which is also listed on the Saudi stock market. Construction of the plant started in 2008 and it secured debt financing in 2007. It received $1.8bn from banks and this was oversubscribed despite the onset of the subprime mortgage crisis. The margins were 80 bps, stepping up thereafter from 95-115 bps across the 15-year tenor (MEES, 19 November 2007). The project was forced to run the subprime gauntlet because of the tight time schedule under the terms of its gas feedstock allocation from Saudi Arabia’s Ministry of Petroleum and Mineral Resources. The project attracted both domestic and international banks, and secured $500mn of cover from the Export-Import Bank of the US (Exim), and funding from Saudi institutional lenders (the Public Investment Fund and Saudi Industrial Development Fund).
Copyright MEES 2012.
