Oil field and petrochemicals services company 'Technip-Italy' has won a contract to build an ethylene and propylene plant for Saudi Basic Industries Corp. (SABIC) in the Red Sea industrial zone of Yanbu.
SABIC said it signed last Wednesday a letter of intent with Technip- Italy for the engineering, procurement and construction of the plant which will be able to produce 1.3 million tons of ethylene and 400,000 tons a year of propylene.
Reuters quoted officials as saying the Yanbu plant will use mixed ethane and propane feedstock.
A SABIC statement gave no value for the deal, the core part of its YANSAB project, which aims to add nearly 4 million tons of petrochemical production a year. But industry reports have estimated the value at around $700 million to $800 million.
The Saudi petrochemical giant announced plans last week to spend $8 billion as part of its drive to expand production over the next three years.
"This mega-project was undertaken by SABIC at Yanbu Industrial City as an extension of SABIC's ambitious plan to significantly increase production of basic petrochemicals, intermediates and polymers by 2008," SABIC Chief Executive Officer Mohammed Al-Mady said in the statement.
Sources close to the deal said work would start immediately on building the plant. They gave no timetable for completion but said the agreement set a "challenging schedule".
SABIC output reached 42.9 million tons last year and profits doubled to $3.8 billion.
