TOKYO: Sumitomo Chemical Co. Ltd. expects to win project finance approval for the $7 billion expansion of a petrochemical project in Saudi Arabia in the first half of 2014 despite a series of problems at the existing complex, its president said.
“The Rabigh II plan is on track with an aim to start operation in 2016. The total investment plan of $7 billion is unchanged,” Sumitomo Chemical President Masakazu Tokura told a news conference.
PetroRabigh, which runs the complex on the Red Sea coast of Saudi Arabia, has annual output capacity of 18 million tons of refined products and 2.4 million tons of petrochemicals. PetroRabigh is a petrochemical joint venture between Japan’s Sumitomo Chemical And Saudi Aramco.
The parent companies agreed last year to go ahead with a $7 billion expansion of the Rabigh project in the Kingdom, but the financing details have not been disclosed.
“We are in negotiations with financial institutions on the project finance for Rabigh II. We expect to get an approval in the first half of next year,” Tokura said.
“Until the project finance is ready, parents companies will be providing money needed to proceed with the Rabigh II project,” he said.
Tokura said part of the construction for the second phase of the project had already begun.
Under Rabigh II, an existing ethane cracker will be expanded and a new aromatics complex will be built using around 3 million tons per year of naphtha to make higher-value petrochemical products.
The two parent companies will make a planned capital injection of about 100 billion yen ($986.19 million) each in PetroRabigh either next year or in 2015, Tokura said. There have been repeated problems with its first phase operation.
PetroRabigh said in October it had started to bring its ethane cracker back into operation after fixing a water leak. That followed a power outage which forced it to shut operations in September.
PetroRabigh shut its complex for about 20 days of maintenance at the start of this year after power and steam supplies were cut temporarily.