Saudi Sipchem drops Al-Jubail cracker project

16 June 2008 18:43  [Source: ICIS news]

Photo courtesy of SIPCHEMBAHRAIN (ICIS news)--Saudi International Petrochemical Co (Sipchem) has dropped its 1.3m tonnes/year cracker project at Al-Jubail, Saudi Arabia, a senior company source said on Monday.

Instead the company will secure ethylene and propylene through an arrangement with existing crackers at the same location for derivative projects, said  vice president of the company Abullatif Bhairi, speaking at the Middle East Petrochemicals 2008 conference.

“We are making major structural changes in the project. A complex without a cracker improves project economics,” Bhairi said.

He added: “We will utilise the surplus ethylene and propylene at Al-Jubail under tolling arrangements. The crackers at Al-Jubail are not fully utilised; no additional investment would be needed at any of the crackers [to provide ethylene and propylene to Sipchem].”

Sipchem, which had received gas allocation for its cracker project, would now focus on differentiated products which include ethylene vinyl acetate (EVA), acrylonitrile (ACN), methyl methacrylate (MMA), polymethyl methacrylate (PMMA), polyacetals and polyvinyl acetate (PVA), sodium cyanide and carbon fibre, Bhairi said.

Besides the cracker Sipchem has also dropped plans for low-density polyethylene (LDPE), high density PE (HDPE) and polypropylene (PP) which were part of the original project configuration.

Bhairi declined to name the companies with which Sipchem would have tolling arrangements for ethylene and propylene.

Jubail houses crackers operated by Sabic’s Petrokemya, Kemya, Sadaf and Sharq. New cracker projects at Al-Jubail include those by Sharq, National Chevron Philips (NCP), Saudi Ethylene and Polyethylene Co (SEPC) and Saudi Kayan Petrochemical Co.

Bhairi highlighted the major issues that Sipchem had faced in putting together its original project which included the 1.3 tonnes/year cracker and plants for 18-20 derivatives.  Sipchem had planned to complete the complex in 2011.

There were major challenges on costs, schedule, availability of qualified contractors and financing, said Bhairi.

“We went through 20 technologies and discussed several potential joint venture partners. We [now] feel it is possible to make every project independent. Our idea is to have someone else crack our ethane/propane and have a good transfer price,” he added.

The Middle East Petrochemicals 2008 conference, organized by MEED, concludes on Tuesday.

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By: Malini Hariharan
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