BP and Delta sign MOU for Saudi petrochem investment

09-Jun-05

Negotiations are underway between BP's Innovene and Delta International (a leading Saudi-owned independent development company) for the construction of a world-scale cracker and associated derivative capacity in Saudi Arabia. The beginning of negotiations between the two is marked by the signing of a Memorandum of Understanding (MOU). Subject to final approvals, an agreement will be signed before the end of the year, with commissioning of the first plants expected in late 2008. To be built at an investment outlay of US$2bn, with sites being explored in Jubail, the project will form a platform for future long-term growth opportunities. Innovene and Delta will be equal partners in the joint venture. Delta is reputed to forge highly successful long-term strategic alliances with major companies in the countries across the globe. Innovene was created as a wholly owned subsidiary of BP on April 1, 2005. Innovene has an annual petrochem production of 15 million tons, with revenues of over US$15bn and US$9bn in total assets. Innovene, with global headquarters in Chicago, has major manufacturing sites at Grangemouth in Scotland, Lavera in France, Koln in Germany and Lima, Chocolate Bayou and Green Lake in the US. SECCO, which became operational in March 2005, is a joint venture between Innovene/BP, Sinopec and SPC in Shanghai and is the largest petrochemical complexes in China to date. BP may sell part of its stake in Innovene by way of an IPO later in 2005, subject to necessary approvals and market conditions.