Ex-Im Bank Backs Egyptian Ammonia Project with $230 Million Guarantee for U.S. Suppliers

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The approval of a $229.8 million long-term guarantee by the U.S. Export-Import Bank (Ex-Im Bank) for U.S. companies supplying a new ammonia plant project in Egypt will benefit 22 companies from Texas, Oklahoma, Kansas, Illinois, Colorado, and Kentucky. The plant will be built for Egyptian Basic Industries (EBIC), an exporter of ammonia. The grassroot anhydrous ammonia plant will be constructed at a site in Sokhna Port in the Suez Industrial Zone. With a designed capacity of 2,000 tons per day, it will have the largest production capacity for ammonia plants in Egypt. Egypt already has ten fertilizer plants using petroleum products to produce fertilizer intermediates and components. The site will include a pipeline corridor connecting the ammonia production plant to storage tanks located in Sokhna Port.

Plant design will be based on the KAAP - Advanced Ammonia Process developed and owned by Kellogg Brown & Root, which is expected to be one of the sponsors/owners of the EBIC project company. Other equity holders will be PSK Holdings, an Egyptian petrochemical company, Orascom Construction Industries, a major Egyptian construction firm, the state-owned oil and gas company Egyptian General Petroleum and other private investors.

The Ex-Im Bank guarantee for the U.S. suppliers of equipment and services to the project is the bank's first limited recourse project financing in Egypt with repayment of this type of private financing based on project revenues.

The infrastructure provided by the government for new investment in the fertilizer sector has been designed to use the knowledge of the sector and available cheap labor and crude oil to develop the growing petrochemical sector into a major exporter. Egypt became self-sufficient in fertilizer many years ago.

The Egyptian Petrochemicals Holding Company (Echem) is planning to use available supplies of natural gas in the country's Mediterranean Industrial Zone in Damietta to produce methanol and ammonia for export. In 2004, both the Egyptian and U.S. governments made grants available for a new methanol/ammonia plant project.

The world's largest methanol supplier, Methanex Corporation, is considering setting up a plant to tap the country's gas reserves. If the $500 million project is given the go ahead, it will have a capacity of about 1.3 million tons per annum. Methanex will have a 60% stake with local companies taking the balance.

In the country's overall petrochemical industry scenario the government is pushing ahead with the privatization of oil and petroleum companies under the guidance of the Investment Ministry. The companies targeted are those in which substantial public funds have been invested: Alexandria Petroleum Products Company, Sidpec, Alexandria Lube Oils, and Egypt Gas.

For related news items see "September 22, 2003 - Echem Launches Feasibility Study for $1.5 Billion Petrochemical Complex in Egypt; March 17, 2004 - Egypt to Boost Petrochem Capacity with Terminal and $1 Billion Olefins Project; and January 28, 2005 - Fourteen New Petrochem Projects in Egypt's $220 Billion Oil and Gas Expansion.

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