The new Acetex/Tasnee plant will be located inside Jubail Industrial City's 20,000-acre (8,000-hectare) Industrial Zone (part of which is pictured above).
Canada's Acetex Building $1-Billion Petrochemical Plant in Saudi Joint Venture
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
VANCOUVER, British Columbia, Canada – Acetex Corporation, (www.acetex.com) which draws its daily bread from blending chemicals, has entered a newly formed joint venture to build a US$1-billion plant in Jubail Industrial City, Saudi Arabia.
Company officials announced the joint-venture
Acetex's corporate moniker comes from its early focus on products utilized in making polyester textiles. The name combines acetic acid, which, along with other ingredients, is used to make textiles.
agreement at Acetex's headquarters in Vancouver, British Columbia. The partnership will pair the Canadian firm with Saudi Arabia's state-owned Tasnee Petrochemicals (www.saudinf.com) to construct a plant producing acetic acid, vinyl acetate monomer (VAM) and methanol.
Those outputs and their derivatives are blended into a wide variety of products used in a range of industries, spanning the automotive, construction, consumer-goods, packaging, pharmaceutical and textile sectors. Acetex's products are used in goods that include polyester fibers, inks, chewing gum, paints, lacquers, dyes, adhesives, PBV (polyvinyl butyrate) safety glass, detergents and pharmaceuticals.
The Saudi Arabia project includes another important blend - one on which Acetex is betting a large part of its future. The Jubail plant will utilize Acetex's integration technology for co-producing acetic acid and methanol.
That proprietary technology will reduce plant investment by more than $100 million, Acetex officials are projecting, as well as considerably cutting the facility's operating costs. Those lower expenditures reflect a major focus for the company, which recorded a loss of about $19 million last year on sales of some $332.9 million.
"From a shareholder's point of view, this project confirms the substantial value of our proprietary integration technology," said Acetex Chairman and CEO Brooke N. Wade. "When complete, [the plant] will almost double our company's acetyls capacity and will make us the low-cost producer in both Europe and the Far East."
Acetex currently ranks as Europe's second-largest producer of acetic acid and polyvinyl alcohol (both acetyls), while it's the continent's third-largest producer of vinyl acetate monomer.
Plant Will Be Built in
Tasnee's Petrochemicals Complex
The Saudi Arabian site, Wade said, is "an excellent strategic location [with] first-class infrastructure." The plant will be located in Tasnee's petrochemical complex in Jubail Industrial City.
Hired by the Jubail and Yanbu Royal Commission (www.rcjy.gov.sa), Bechtel in the late 1970s began building the $40-billion Jubail Industrial City on Saudi Arabia's east coast. The strategy in establishing the new city was to focus on building up 11 industries, the most prominent including chemicals, fertilizers, iron and steel, oil refining and petrochemicals. Created from scratch, Jubail Industrial City includes an Industrial Zone that covers a whopping 20,000 acres (8,000 hectares).
The new city's development strategy also encompassed the Saudis' effort to more aggressively capitalize on the nation's natural gas deposits. Saudi Arabia has some 4 percent of the world's supply of natural gas. One of Acetex's principal feedstocks, natural gas was a major rationale for creating the joint venture in the area.
Saudi Arabia's natural-gas supply ranks as the fourth-highest total for a single nation (trailing Russia, Iran and Qatar, respectively). Until, the 1970s, though, that gas was often regarded as an irritating obstacle in Saudi oil exploration. It was usually flared off from oil wells.
Acetex currently has plants in Canada, France and Spain, including the VAM production operation pictured above in Pardies, France, which has an annual capacity of 136,364 tons (150,000 metric tons).
Part of the state-owned National Petrochemical Industries Company (NPI), Tasnee Petrochemicals also reflects that broadened focus. Both NPI and Tasnee were created in 2001 to further expand private-sector participation in Saudi Arabia's already large petrochemicals industry. (For example, another state-owned arm, Saudi Basic Industries Corporation, ranks as the world's 11th-largest producer of petrochemicals, accounting for about 10 percent of world production.)
State Firm Also Allocating Gas
The natural gas used at the Acetex/Tasnee facility has already been allocated by Saudi Aramco, yet another state-owned organization, said Wade. Saudi Aramco controls about 98 percent of the nation's upstream oil activities.
Acetex also named a number of "strategic partners" in the joint venture. Those partner companies include Saudi-based Al-Olayan Financing Co., Kuwait-based Gulf Investment Corporation (which is owned by the Gulf Cooperation Council Countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates and Yemen), Kuwait-based National Industries Group and the Saudi Pharmaceutical and Medical Appliances Co.
Neither of the joint venture partners outlined the terms of the strategic partners' participation. Wade did say, though, that the project's multiple partners strengthen Acetex's financial position.
"Financing of the project will be on a non-recourse basis, utilizing attractive regional sources," Wade explained. "After recognition of credit for technology contributions and financial support available from industrial offset programs, we anticipate that Acetex will fund its contribution to the projects without the requirement to issue additional equity."
800 'Permanent Jobs' Projected
Tasnee Petrochemicals will also have a substantial share of the two companies that will be created as part of the joint venture. The Saudi arm will split the acetyls (acetic acid and VAM) company 50-50 with Acetex, but it will own 75 percent of the methanol company. Tasnee Petrochemicals is now starting up its first plant in Jubail, which will produce some 454,545 tons (500,000 metric tons) a year of propylene and polypropylene.
The new Acetex/Tasnee plant will have an annual production capacity of 1.64 million tons (1.8 million metric tons of methanol), 454,545 tons (500,000 metric tons) of acetic acid and 250,000 tons (275,000 metric tons) of VAM. Production is scheduled to start in 2007, Wade said.
The project "will create approximately 800 opportunities for permanent direct and indirect employment," Acetex said in a release announcing the project. Wade, however, didn't provide any estimates as to how many of those jobs will be for Acetex workers. Currently, the company has some 550 total employees.
The Jubail plant will be the company's first in the Middle East. Acetex has existing plants in Canada, France and Spain.
When the new Saudi plant comes online, the company will also begin selling its products in the Middle East. Acetex will cooperate with Tasnee Petrochemicals in marketing the joint venture's acetyls output.
"These projects fit well with our long term growth strategy of becoming a global chemical company," Wade said.
OK CANADA. THAT MIGHT EXPLAIN SYMPATHY TOWARD SAUDI CAUSES SUCH AS THE 'PALESTINIANS'. PERHAPS WE COULD HIRE SOME PALESTINIANS FROM GAZA OR WEST BANK TO WORK - AND LIVE- HERE?