Saudi Aramco and Dow plan to invest US$26 bln petrochem project in Saudi

07-Jul-08

In a bid to take advantage of the world's biggest oil reserves and meet rising demand for plastics used in consumer goods, Saudi Aramco and Dow Chemical Co. plan to invest US$26 bln in a petrochemicals complex in Saudi Arabia. As part of its investment strategy to finance the project, the two partners plan to raise about US$18 bln from loans and bonds starting next year. Royal Bank of Scotland Group Plc and Riyad Bank will help raise 70% of the project's cost. Twelve international and Gulf lenders bid to advise on the Ras Tanura financing, including Citigroup Inc., HSBC Holdings Plc, BNP Paribas SA, Calyon, Societe Generale SA, Samba Financial Group and Gulf International Bank BSC. Dow and Aramco will also seek export credit agency funding once project manager KBR Inc. has chosen all the plant's suppliers. Aramco and Midland, Michigan-based Dow last year formed an equal venture to build factories at Ras Tanura on Saudi Arabia's Persian Gulf coast. The plants will have a total capacity to produce 8 million tons, comprising of ethylene, polyethylene, chlorine, caustic soda, epoxy resins and polyurethane. Production is planned to commence in Q2-2012. The oil ministry of Saudi Arabia plans to spend US$250 bln on oil, gas, power and water production through 2012.