Saudi industrial group Alujain Corporation announced on Sunday that it has received the Ministry of Energy's nod on feedstock allocation for establishing a new petrochemicals project in Yanbu Industrial City at a total cost of 7.5 billion Saudi riyals ($2 billion).

The Yanbu project comprises of a propane gas processing plant to produce propylene, a polypropylene plant and a complex to produce polypropylene compounds and PP specialty materials, the company said in a stock exchange statement

The statement said technology selection for the main production units, and prequalification of the engineering, procurement and construction (EPC) contractors have been completed, adding that work has started on [Front End] engineering design for the main units.

The project, upon completion, will produce more than 600,000 tonnes/year of polypropylene, polypropylene compounds, and specialised construction materials from polypropylene derivatives, in addition to about 25,000 tonnes/year of saleable hydrogen.

It will also include a grid for connecting the propylene and polypropylene production units of subsidiary National Petrochemical Industrial Company (NATPET) to the two production units in the new project for scale and efficiency.

The project is likely to begin operation in the first half of 2026, the statement added.

(Writing by D Madhura; Editing by Anoop Menon)