Egyptian Petrochemicals Holding Receives $2 Billion in Bids for Petrochemicals Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--Egypt's state-owned Egyptian Petrochemicals Holding Company (ECHEM) (Cairo, Egypt) has received bids from engineering and construction firms to build the proposed $2 billion petrochemicals complex at Alexandria. The cracker facility at the complex will process ethane, which is a component of natural gas, to produce ethylene. The ethylene produced will then be used to manufacture polyethylene (PE). The facility will have the capacity to produce 750,000 tons to 1 million tons per year of ethylene. Lummus Technology (Bloomfield, New Jersey), a business unit of technology and engineering company Chicago Bridge & Iron Company NV (NYSE:CBI) (CB&I) (Amsterdam, Netherlands), will provide the technology for the project.

Some of the bidders included Maire Tecnimont SpA (BIT:MT) (Rome, Italy), Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea), Saipem SpA (BIT:SPM) (Milan, Italy), and Toyo Engineering Corporation (TYO:6330) (Tokyo, Japan). ECHEM had set February 28, 2010, as the last date for submission of proposals. At least four international construction companies submitted their bids before the deadline. However, no date has been set for financial and commercial bids. The bidding companies will be holding talks with ECHEM shortly.

In 2002, the Egyptian government established ECHEM, under the protection of the Ministry of Petroleum, to implement and oversee a $20 billion, 20-year national petrochemicals master plan. The master plan, which was announced in 2002, aims to add 50 production facilities and petrochemical complexes in the country. These projects, which will include 20 greenfield sites, are expected to augment Egypt's manufacturing capacity of intermediates and final products by 15 million tons per year. The facilities will include aromatics, olefins, polyolefins and methanol production units. ECHEM has identified 30 million square meters of land across seven locations in the northern region of the country for these projects. The master plan envisages the creation of about 100,000 direct and indirect jobs.

ECHEM will work as a nodal agency to implement the national petrochemicals plan, and ensure the availability of resources to international and domestic investors. The company will ensure timely completion of projects and assist in developing Egypt's petrochemicals sector and the economy.

Egypt has natural gas reserves of about 67 trillion cubic feet. Although a leading oil and gas producer, the country's petrochemical production capacity was only 600,000 tons per year in 2002. In the 1950s, Egypt started producing ammonia from surplus refinery fuels. The country planned two petrochemicals complexes at Amerya and Suez in the 1960s. In the 1970s, after extensive feasibility studies, construction of an 80,000-ton-per-year polyvinyl chloride (PVC) facility began at Amerya. Production commenced in the 1980s. This was followed by a 200,000-ton-per-year PE and 300,000 ethylene facilities. Until 2002, Egypt imported ethylene for producing PVC.

According to the "Egypt Petrochemicals Report -- First Quarter 2010," which was published by Business Monitor International (BMI) (London, England), Egypt's ethylene production capacity was about 300,000 tons per year in 2009. During the same period, PE and polypropylene production capacities were 225,000 tons per year and 220,000 tons per year, respectively. In 2010, ethylene and PE capacities are each forecast to increase to 600,000 tons per year. The report indicates that the future of Egypt's petrochemicals industry and national master plan depends on the country's ability to attract international investments.

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