Page 12 - DMEA Week 18 2020

DMEA PETROCHEMICALS DMEA
Egypt’s SIDPEC to move forward with $1.2bn polymer project
EGYPT
SIDPEC still has not announced a lead contractor.
EGYPT’S Sidi Kerir Petrochemicals (SIDPEC) plans to push ahead with the development of a $1.2bn propylene and polypropylene project, despite the market uncertainty, Zawya reported on April 30.
The company took the decision to go ahead with the plan at its ordinary general meeting, the news agency reported. Management has already selected the US’ Honeywell UOP and Grace as technology providers for the project. But no updates have been announced regarding the choice of a main contractor.
SIDPEC held a tender for the engineering procurement and construction (EPC) contract last year. NewsBase understands that bids were prepared by South Korea’s Samsung Engineer- ing, Italy’s Saipem and Chinese firms Huan- qiu Contracting & Engineering (HQC) and China Petroleum Engineering & Construction (CPECC). However, no contract was awarded and another contest took place this year.
The project’s equity portion – reportedly 30% – is expected to be funded with a capital
increase, according to regional brokerage Naeem Research. The remaining 70% will be raised through debt. Egypt’s NI Capital has already been appointed as the financial advisor.
SIDPEC launched feasibility studies for the project in 2018, initially aiming to start produc- tion in 2020. The new plant is expected to pro- duce 500,000 tonnes per year of propylene and 450,000 tpy of polypropylene.
That year SIDPEC, Egypt’s largest petro- chemicals producer, also signed the licence con- tracts with Honeywell and Grace, as well as a deal with Egyptian Natural Gas Co. (GASCO) for the supply of feedstock. It went on to acquire a land plot for the plant last year.
Egypt wants to expand several new petro- chemicals projects, exploiting its resources to help meet growing domestic demand for plastics, polyesters and other key goods. The government also wants to develop some products that can be exported.
SKPC is state-controlled, although some of its shares were listed in Cairo in 2005.™
FUELS
Delek sheds Israeli fuel arm for $205mn
ISRAEL
Delek is under pressure to clear some of its $6bn debt.
ISRAEL’S Delek Group announced on May 7 it had signed a binding memorandum to divest its fuel storage and distribution arm Pi Gelilot to a third party for ILS720mn ($205mn).
The company, which is struggling to keep a handle on its debts, said the deal, still subject to regulatory and board approvals, included land on which Pi Gelilot’s fuel terminals are operated in the cities of Haifa, Ashdod, Beer Sheva and Jerusalem. It did not disclose the buyer’s identity.
“The memorandum of understanding [MoU] is subject to receiving the approvals of the boards of directors of the parties and a deposit of ILS100mn by the buyer in escrow within one business day from receipt of approvals of the boards,”Deleksaidinaregulatoryfiling.
A detailed agreement will be put together and signed within 30 days and the remaining balance paid within a further 30 days.
Under the memorandum, Pi Gelilot will continue supplying Delek Israel the services it supplies at the Ashdod, Beer Sheva and Haifa
terminals for up to 10 years under the same terms as now, with another five-year option depending on the revenues the terminals generate. The fuel distributor will likewise continue serving Delek at the Jerusalem terminal for two years.
Delek posted a widened loss for the fourth quarter on May 3, and auditors placed a “going concern” warning on the company. Bondholders have threatened to make Delek repay the ILS6bn it owes them if it does not immediately inject ILS400mn into its business.
Delek is also a major upstream player, devel- oping several large gas fields in the east Medi- terranean’s Levant Basin. It also expanded in the North Sea last year through the $2bn takeover of Chevron’s operations there, via its Ithaca Energy subsidiary. That deal considerably increased its debt burden. In a statement this week, Delek said it expected “to reach an agreed plan concerning an update of the financial covenants and credit terms, strengthening of the collateral and rein- forcing its capital.” ™
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w w w . N E W S B A S E . c o m Week 18 07•May•2020