Advanced Petrochemical Company (Advanced), a leading Saudi Arabia based producer of petrochemical products, and Bayegan Group (Bayegan), a unique Turkish international trading company, engaged in petroleum derivatives, petrochemicals and other commodities, today announced the signing of a Memorandum of Understanding for the development of a joint US$ 1 billion Propane Dehydrogenation (PDH) and Polypropylene (PP) plant.
The announcement was made at a signing ceremony in Istanbul in the presence of Turkey’s Minister of Economy Mr. Zafer Caglayan, as well as representatives of the joint venture partners and their shareholders. The ceremony was also attended by members of the industry and media to mark this important milestone.
The project, in which Advanced will hold a 70% equity stake and Bayegan Group 30%, is comprised of construction of a state-of-the-art PDH-PP Plant, all other required utilities and port facilities, to be located in Southern Turkey. Once fully operational, the plant is expected to produce approximately 500,000 tons of polypropylene per year. At current rates, this will replace approximately 30% of polypropylene imports into the country.
Commenting on the announcement, Chairman of Advanced Petrochemical Company, Mr. Khalifa Abdullatif Al Mulhem, said: “This project is of great significance for Advanced. It marks our first major overseas investment and is an important step forward in the execution of our growth strategy. It is also an important project, which will enhance further industrialization in Turkey. Our investment reflects our confidence in the strength of our partner, Bayegan Group and the Turkish economy as well as its investment friendly climate, for which we thank them. More importantly, this venture is a true reflection of the strong and everlasting cooperation, trade and investment between Turkey and the Kingdom of Saudi Arabia, which are both among the most dynamic and fast growing economies globally.”
The development of the project will leverage the knowledge, experience and track record of Advanced in developing, executing and operating world class facilities that are highly efficient, environmentally friendly and which support economic growth in their markets of operation. Advanced currently operates PDH and PP plants in Saudi Arabia’s Jubail Industrial City. The company produces 450,000 tons of polypropylene per year, which is known for its high quality and reliability. Advanced’s polypropylene is marketed and sold globally across the Middle East, Asia and Europe, with 30% of its output sold to customers in Turkey.
Bayegan’s strength in global trading, distribution and their immense knowledge on the Turkish domestic market will perfectly complement Advanced’s technical expertise in ensuring successful implementation of the Project.
Mr. Ercument Bayegan, Chairman of Bayegan Group, added, “We are extremely proud with this major step to realize this Project. As Bayegan, this project is in line with our vision to continue our growth globally with our 23 worldwide offices.
With its strategic logistic location, high consumption of petrochemical products together with its strong and reliable economy, have significantly positioned Turkey in the global market.
We would like to thank our partner, Advanced Petrochemical Company, for their confidence in us, to all our valuable customers and partners, for their valuable support. Our special thanks to our Government, for their effective role in the significant achievement in Turkey’s global position
“Today, Turkey is the world’s second largest importer of polypropylene and we expect demand, driven by the country’s strong growth and high domestic consumption, to increase exponentially in coming years, added Engineer Abdullah M. Al Garawi, CEO of Advanced. “With the construction of this plant, we bring ourselves in closer proximity to our important and growing customer base. We are confident that this investment will create value for Advanced and our shareholders by diversifying our production geographically and creating new streams of revenue.”
Having the plant in Turkey will help to reduce the country’s trade deficit as well as other added benefits for the Turkish economy, such as employment opportunities whereby during its implementation phase, the project will employ a workforce of more than 3,000. Once operational, the plant will create approximately 250 direct jobs and 1,250 indirect employment opportunities.
Construction of the project is expected to commence 2nd quarter of 2013 with completion targeted for fourth quarter of 2015.
Concluding, Chairman of Advanced, Mr. Khalifa Abdullatif Al Mulhim, said: “We are excited to move forward with the implementation of this project. At the same time we continue to look for other opportunities to leverage our success and expertise to date in order to achieve further profitable growth and take advantage of opportunities in the petrochemicals sector, which continues to grow by about 5-6% percent annually.”