Saudi Arabia’s Advanced Petrochemical Company has announced that it has signed a deal with South Korea’s SK Gas to set up two petrochemicals units for a combined value of $1.8 billion in the Kingdom.

The company stated that its subsidiary Advanced Global Investment Company (AGIC) and SK Gas have agreed to form a joint venture called Advanced Polyolefins Company, which will construct and operate the plants.

According to the statement, two plants, a propane dehydrogenation and a polypropylene unit, will be based in Jubail Industrial City, in Saudi Arabia and will have the capacity to manufacture 843,000 tons of propylene and 800,000 tons polypropylene per annum, respectively.

It stated that 25 per cent of the finance will be funded by shareholders through equity, while the remaining 75 per cent will be funded through bank borrowings, arranged by Advanced Polyolefins. AGIC will own an 85 per cent equity stake in the JV company, while the remaining 15 per cent will be controlled by SK Gas.

Construction is expected to begin in 2021 and the plants will be supplied with propane – their main feedstock – by state-controlled Saudi Aramco on a long-term basis, it added. Advanced Petrochemical also stated that ‘the financial impact of the investment is expected after the commencement of commercial operations of the project by second half of 2024.’