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Egypt to Export Petrochemicals by New Ethylene Plant

Source: Reuters 9/28/2014, Location: Africa

A new state-owned ethylene factory due to start production in Alexandria next year could save Egypt about $500 million on annual imports and allow it to begin exporting petrochemicals to Western Europe and Africa, its chairman said.

The factory, operated by Egyptian Ethylene and Derivatives Company (ETHYDCO), a joint venture formed by three state-run petrochemical companies, should produce enough to cover up to 45 percent of local demand for ethylene and other petrochemicals needed to manufacture plastics, rubber and glass, chairman Abdel Rahman Zeid said.

"We will direct 70 percent of production to the local market to acquire between 40 and 45 percent of the market," he told Reuters in an interview. The company would export the remaining 30 percent to cover dollar needs, he said.

Zeid said the project was 71 percent complete and would begin production in the last quarter of 2015.

Egypt's oil minister has been quoted in the media as saying a shortage in gas supplies has slowed down petrochemicals projects in the country.

In an interview with Reuters he said that the government plans to invest $14.5 billion in developing its refining and petrochemicals sectors over the next five years.

During a recent visit, the 175-feedan site in western Alexandria, Egypt's second-largest city, was busy with engineers and labourers rushing to complete the project.

ETHYDCO is a $1.9 billion joint venture set up in 2011 by four banks and three state-run energy companies: Sidi Kerir Petrochemicals, the Egyptian Petrochemicals Holding Company (ECHEM) and gas transport firm Gasco.

Egypt needs around 500,000 tons of ethylene annually. Sidi Kerir is said to be the largest producer of petrochemicals in the country.

Zeid said the new factory would produce 460,000 tons of ethylene annually and 400,000 tons of high- and low-density polyethylene.

"For the first time in Egypt we will produce about 20,000 tons of butadiene annually and 36,000 tons of polybutadiene," he said.

Butadiene derivatives are used in products ranging from car tires to golf balls.

Zeid said he expects to cover initial investment costs, a mix of bank loans and self-funding, within 10 years after production begins.

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