Thursday, Sep 24, 2020
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Saudi Arabia to develop $1.8 bn chemical plant in the kingdom

Saudi Arabia Korea chemical plant
The project will be developed by Saudi Arabia’s Advanced Petrochemicals and South Korea’s SK Gas Petrochemical

Saudi Arabia is set to develop a $1.8 billion chemical plant in the kingdom, according to media reports.

Saudi Arabia’s Advanced Petrochemicals has entered into a joint venture with South Korea-based SK Gas Petrochemical to jointly develop the chemical plant.

25 percent of the finance for the project has been secured by equity from shareholders and the remaining 75 percent will be financed by the newly formed JV, with borrowing from lenders.

Advanced Global Investment Company (AGIC), a subsidiary of Advanced Petrochemicals Company will own 85 percent stake in JV, while the remaining 15 percent will be owned by SK Gas.

Construction of the chemical plant in Saudi Arabia is expected to begin in 2021.

With regard to the chemical plant to be developed in Saudi Arabia, Advanced Petrochemicals said in a statement, “The financial impact of the above investment is expected after the commencement of commercial operations of the project by H2 of 2024.”

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. Saudi Aramco will be the main supplier of propane on a long-term basis, Advanced Petrochemical said in a bourse filing to the Tadawul stock exchange.

Propylene, made by dehydrating propane, is an important intermediate for the production of polypropylene, which has a wide range of applications including automotive parts, pipes and kitchen utensils.

Both parties signed companies had signed a memorandum of understanding on the project following Saudi Crown Prince Mohammed bin Salman’s state visit to South Korea last June.

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