Saudi Arabia's Advanced Petrochemical Company (ADVANCED) announced on Sunday that it is setting up a joint venture project at a total cost of approximately $1.8 billion (6.75 billion Saudi riyals) to manufacture propylene and polypropylene in Jubail Industrial City.
The company said in a stock exchange statement that its subsidiary Advanced Global Investment Company (AGIC) has signed an shareholders' agreement with Singapore-headquartered SK Gas Petrochemical Pte. Ltd. (SKGP), a subsidiary of South Korea's SK Gas Co, to incorporate a new JV called Advanced Polyolefins Company.
The JV will construct and operate a Propane Dehydrogenation (PDH) plant with a nameplate capacity of 843,000 tons per annum (tpa) of propylene and two Poly Propylene (PP) plants with a total capacity of 800,000 tpa of polypropylene.
Advanced Polyolefins Company expects to begin construction in 2021 and commence commercial operations by the second half of 2024, the statement filed with Tadawul said. Saudi Aramco would supply the project with its main feedstock propane on a long-term basis.
According to the statement, the project would have a debt equity ratio of 75:25. AGIC would own 85 percent equity stake (financed by Advanced) in the JV with remaining 15 percent owned by SKGP.
The statement also noted that AGIC had signed conditional land allocation letter with the Royal Commission for the project in Jubail II. The company has signed a license agreement with US-based Lummus Technology for the supply of CATOFIN Technology for the PDH plant and two license agreements with Italy's Basell Poliolefine Italia for the supply of SPHERIPOL Technology and SPHERIZONE Technology for the two PP plants with capacity of 400,000 tpa each.
Project management consultants have been appointed for the project, the statement added without naming the firms.
ADVANCED had reported a 5.9 percent year-on-year increase in net profit to 759.31 million Saudi riyals for 2019, the highest ever in the company's history, which it attributed to a 6.2 percent increase in sales volume, and reduction in propane and outsourced propylene prices by 26.5 percent and 16.3 percent respectively.
(Writing by Syed Ameen Kader; Editing by Anoop Menon)
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