Samsung Engineering Secures $1.2 Billion EPC Contract for Ammonia and Urea Plant in Ruwais

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Researched by Industrial Info Resources (Sugar Land, Texas)--Ruwais Fertilizer Industries (Fertil) (Abu Dhabi, United Arab Emirates), a subsidiary of Abu Dhabi National Oil Company (ADNOC) (Abu Dhabi), has awarded the engineering, procurement and construction (EPC) contract for the development of a second fertilizer plant in Ruwais to Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea). The plant will be known as Fertil-2.

Samsung won the contract against competition from Maire Tecnimont SpA (BIT:MT) (Milan, Italy) and Saipem SpA (BIT:SPM) (Milan). The three bidders delivered financial proposals to Fertil in September this year, some nine months after submitting technically detailed bids.

The contract, worth $1.2 billion, covers the construction and commissioning of Fertil-2, which will be built in Ruwais, about 250 kilometers west of Abu Dhabi. The plant will produce both ammonia and urea and is scheduled to begin production in January 2013.

As with the 3,300-ton-per-day Ma'aden ammonia project in Saudi Arabia, which is scheduled for completion in 2010, Samsung will use the technology to produce ammonia under license from Uhde GmbH (Dortmund, Germany), part of ThyssenKrupp AG (ETR:TKA) (Dusseldorf, Germany). In addition to the Ma'aden project, Samsung has extensive experience gained from the construction of the Phu My fertilizer plant in the Bah Ria Vun-Tau province of Vietnam, completed in September 2004.

Samsung sees the award of the contract as a significant step as it looks to establish itself in the potential multibillion-dollar marketplace in the Middle East. As well as the Ma'aden project, Samsung recently won a $1.6 billion EPC contract from Saudi Aramco Total Refining and Petrochemical Company, a joint venture between Saudi Aramco (Dhahran, Saudi Arabia) and Total SA (NYSE:TOT) (Paris, France), for two refinery plants at the Jubail Export Refinery complex.

Fertil was established in 1980 as a joint venture between ADNOC and Total, with ADNOC having a majority two-thirds share. Fertil-1, the existing plant at the site, currently produces 1,310 tons of ammonia and 1,850 tons of urea daily, using lean gas from the local onshore fields.

Fertil-2 is scheduled to produce 2,000 tons of ammonia per day, the majority of which will be added to the output from Fertil-1 and used to produce 3,500 tons of urea each day. Currently, Fertil markets about 12% of its output locally within the United Arab Emirates, while the remaining 88% is exported to other Middle Eastern countries, the Far East, India, Africa, the U.S. and Latin America.

A concern among supporters of the new plant is the continuing low price of urea on the world markets. Currently, the price is about $265 per ton in the Middle East, which compares unfavorably with the price of $770 per ton in July 2008. However, ADNOC is committed to continued investments in both upstream and downstream activities in the oil and gas industry and hopes that prices will have increased by the time the plant begins production in 2013.

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