Saudi Kayan Petrochemicals Re-invites Bids for LDPE and Amines Plants at Al-Jubail

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Kayan Petrochemicals Limited (SAU:2350) (Jubail, Saudi Arabia), part of Saudi Basic Industries Corporation (SAU:2010) (SABIC) (Riyadh, Saudi Arabia), has invited bids for the construction of a 300,000-ton-per-year, low-density polyethylene (LDPE) facility and a 200,000-ton-per-year amines production facility, both at Al-Jubail. The company has asked contractors to resubmit their tenders for the engineering, procurement and construction (EPC) contracts for these projects. In the earlier project schedule, the Kayan complex at Al-Jubail, with a total production capacity of 6.5 million tons per year, was expected to commence operations in 2010.

Project officials have stated that three international bidders have expressed interest in being part of the project. According to local reports, Saudi contractors also submitted their bids last month. Sources indicate that the retendering process will allow at least one phase of the project to begin commercial operations by 2012. According to some Saudi contractors, if Saudi Kayan awards the contracts this year, it will take about 25 to 26 months for construction to be completed.

In 2007, Saudi Kayan selected Simon Carves Limited (London, England) to execute a fixed-price engineering services contract for the LDPE project. Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea) was awarded the engineering services contract for the amines facility. Sources indicate that the agreement with Simon Carves included the option of converting the deal into a lump-sum turnkey EPC contract on mutual agreement. However, both parties have agreed to not proceed with the conversion. Simon Carves was performing engineering activities for the LDPE plant with technology assistance from LyondellBasell Industries (Rotterdam, Netherlands). As with the earlier plan, the LDPE plant was expected to be ready for operations by the first quarter of 2010. Saudi Kayan will retender contracts for the amines project to benefit from lower prices. Samsung Engineering is also expected to resubmit its bid for this project.

Saudi Kayan, which is developing the $10 billion Kayan complex in the Al-Jubail industrial city, announced in December 2008 that it had attained financial closure for the project. According to reports, the company had secured funding of about $6 billion for the industrial complex and a $533 million loan from state funds. In May, the company signed a loan agreement with a consortium of banks, which included BNP Paribas SA (EPA:BNP) (Paris, France), ABN AMRO Holdings NV (PINK:ABNYY) (Amsterdam, Netherlands), HSBC Holdings plc (NYSE:HBC) (London) and Arab Banking Corporation (BSH:ABC) (Manama, Bahrain).

Saudi Kayan Petrochemicals is a partnership between Al Kayan Petrochemical Company (Riyadh, Saudi Arabia) and SABIC, with SABIC holding a 35% stake. The company has a capital base of about $4 billion. Saudi Kayan was established to cater primarily to exports of base chemicals to India and China. The Kayan industrial complex is expected to manufacture both base and specialized chemicals. Products include amino ethanols, aminomethyls, choline chloride, cumene, dimethylethanol, dimethylethanolamine, dimethyl formamide, polycarbonate ethoxylates, and phenol. The facility is also expected to manufacture butene-1, propylene, ethylene, polypropylene, and ethylene glycol.

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