Saudi-based Advanced Petrochemical Company (APC) has inked a deal with SK Gas for the construction and operation of two major petrochemical facilities. The agreement will see the construction of a propane dehydrogenation (PDH) unit and a polypropylene unit at a cost of US $1.8bn at Jubail Industrial City.

The PDH plant will boast a total capacity of 843,000 tonnes per annum of propylene, while the PDH facility will manufacture around 800,000 tonnes per annum of polypropylene.

As per the terms of the deal, APC’s subsidiary Advanced Global Investment Company (AGIC) will set up a new joint venture (JV) company, Advanced Polyolefins Company, with SK Gas for the smooth operation of the two plants.

AGIC says the entire project will be financed 25% by equity from shareholders while the remaining 75% will be financed by JV Co through borrowing from lenders. Under this agreement, AGIC will own 85% equity stake in JV Co which will be financed by Advanced, while the remaining 15% will be owned by SK Gas.

A license agreement has already been signed with Lummus Technology for the supply of Catofin Technology for the 843 KTA PDH plant. Two other license pacts have also been inked with Basell Poliolefine Italia for the supply of Spheripol Technology and Spherizone Technology for two PP plants with capacity of 400 KTA each.