LSTK Prowess Offers An Edge
The Saudi Arabian Alujain Corporation has taken a further step towards implementing a long-planned propylene project in Yanbu by appointing Germany's Lurgi as the lump-sum turnkey (LSTK) contractor on the scheme, which will rely solely on propane feedstock from Saudi Aramco.

The $286 million plant will be owned and operated by a limited liability company named The National Propylene Company (Alfasel), which is currently being established. The output of the facility will be used as feedstock for a polypropylene (PP) plant being developed by the local company Teldene, a joint venture between the local National Petrochemicals Company (Natpet), in which Alujain holds a 42 per cent stake, and Europe's Basell.
The proposed plant will produce 420,000 tonnes per year (tpy) of polymer-grade propylene based on propane dehydrogenation (PDH) technology provided by the US' UOP, and feedstock provided by Saudi Aramco. The Alfasel facility will be located next to Teldene's PP plant at Yanbu and will provide all its feedstock requirements. The Alfasel plant is due to come onstream in 2006.
Sources close to the project say that financial arrangements are well under way, with financial close to be achieved in late 2003 or early 2004. About 25 per cent of the financing will be equity, while the remainder will be provided by the Saudi Industrial Development Fund and commercial banks.
Alujain will take a 25 to 30 per cent stake in Alfasel's equity, while up to 20 per cent will be owned by a foreign partner. The remaining equity will be raised through a private placement from selected Saudi and GCC investors.
The Teldene PP project was first proposed in the mid-1990s based on an agreement with Saudi Aramco to provide propylene feedstock. However, after Saudi Aramco amended its feedstock offer, to provide propane instead of propylene, plans for a PDH facility emerged. Italy's Tecnimont has since been selected as the engineering, procurement and construction (EPC) contractor on the project, which is to produce 350,000 tpy of PP, but construction has not yet started.
A project management consultant (PMC) has still to be appointed. Industry sources expect the award of one PMC contract for both projects.
Lurgi is a leading group of companies operating worldwide in the field of process engineering and plant contracting. The Lurgi companies engineer, supply and build turnkey plants for applications in gas and hydrocarbon technology, the petrochemical industry and the growing life science market.
In line with its customers' wishes, Lurgi offers comprehensive solutions in many fields of application. Chiefly based on proprietary technologies, the companies build plants for products that are in demand worldwide.
Lurgi AG, founded in 1897 as a subsidiary of the then Metallgesellschaft AG, is part of the MG engineering division of the Germany-based MG technologies. With a workforce of 1,525, it achieves revenues of 499 million Euros, ($563 million) being represented in more than 30 countries around the world.
Lurgi Oel-Gas-Chemie GmbH, a company of the Lurgi AG Group domiciled in Frankfurt am Main, is the controlling company of the Strategic Business Unit (SBU) Oil-Gas-Chemicals. It registers revenues of around 282 million Euros ($318 million) a year and has 877 employees.
Its activities are targeted to technological leadership based on its proprietary technologies in the product lines gas-to-chemicals, petrochemistry and hydrocarbon technology.
 The company has focused its efforts on customised solutions for strongly growing markets. From project development via LSTK implementation through to commercial operation, plant complexes are globally engineered, constructed and commissioned from one single source and in sole responsibility.
In gas technology, Lurgi offers the whole technological chain for converting fossil raw materials to valuable products, being the market leader in oxygen-based technologies for gas conversion.
 For petrochemistry, the company commands proprietary technologies, especially for obtaining oxidation products and monomers, as well as decisive know how in processes for the production of polymers and aromatics derivatives.
 Its activities in the field of hydrocarbon technology include processes and know how for deep cracking of heavy products to obtain valuable motor fuels as well as solutions for improving product quality in accordance with the latest environmental EU regulations.