The Red Sea petrochemicals project is a planned industrial development located in Egypt’s Suez Canal Economic Zone. Egypt entered into a $1.7 billion framework agreement for the project with Red Sea National Refining and Petrochemicals Company and China National Chemical Engineering Company.
The agreement, which is non-binding, outlines cooperation between the parties in the development of the project and was signed in Beijing. The project is intended to be developed within the Suez Canal Economic Zone as discussions continue regarding its implementation.
Statements made during the signing indicated that CNCEC may participate in the project’s financing structure, with potential support covering a portion of the engineering, procurement, and construction (EPC) contract.
Other Projects
Other than the Red Sea Petrochemicals Project, Algeria’s LAB Plant in Skikda region is also facing significant setbacks.
The construction of the $1.1bn linear alkyl benzene (LAB) plant in Algeria Skikda region is facing significant setbacks. According to industry sources, the project is facing implementation delays. Under the terms of the original contract, it was expected to be completed over 44 months ago. Moreover, project timeline was set as construction commenced in March 2024. One source said:
“There have been some issues with the project and it is not currently progressing in line with the original schedule that was set out.” Conversely, if the project had kept to the original schedule, it would have been completedin November 2027.
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The Challenges Causing Project Delays on the Red Sea Petrochemicals Project
Prior to the latest deal with CNCEC, the Red Sea petrochemicals project has faced several setbacks that have held it back. It has been on hold for more than 18 months. Previously, the project was set to be developed by Sidpec in Alexandria with a budget of $1.7bn. In 2020, Sidpec initiated a review of the feasibility and financial structure of the polypropylene facility. One of the reasons for this was the economic impact of the Covid-19 pandemic. Bids for the plant were submitted on 2 October 2019. At the time, the contract was expected to be awarded in April 2020.
However, there were significant delays to the contract award amid the Covid-19 pandemic. The pandemic led to restrictions on movement and a decline in demand for refined products and petrochemicals, partially stalling the project. Companies such as Italy-based Saipem and South Korea’s Samsung had also shown interest alongside CNCEC. The project’s scope originally included the construction of a polypropylene plant with a capacity of 450,000 tonnes a year. Moreover, it included an air-separating unit and associated facilities.
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