Saudi Aramco and Dow to build $26b chemical plant in kingdom

Dubai: Saudi Aramco and Dow Chemical plan to spend $26 billion on building a petrochemicals complex in Saudi Arabia, said a banker with knowledge of the deal.

Saudi Aramco and Dow, the biggest US chemical producer, will begin issuing bonds and loans next year to finance the project, said the banker, who declined to be identified.

The companies hired Royal Bank of Scotland Group and Riyad Bank to put together a group of lenders to provide 70 per cent of the cost, said Abdul Aziz Al Judaimi, Aramco's vice-president for new business, without providing an amount.

"It is a very aggressive target," Al Judaimi said in an interview in Madrid yesterday. "It will be challenging to get debt, but if we have a project that will get good returns it will be successful."

Aramco formed the joint venture with Dow last year to build a network of factories with the capacity to produce as much as eight million tonnes of chemicals a year, using raw materials from nearby oil and natural gas plants to cut costs. The country's oil ministry said yesterday that it plans to spend $250 billion on oil, gas, power and water production through 2012.

The companies are equal partners in the Ras Tanura project, Aramco said last year. The complex will include factories that make products including ethylene and polyethylene.