Egypt has finally inked an agreement on the construction of its $1.7 billion Red Sea petrochemicals project near the Suez Canal. The agreement was signed with Egypt’s Red Sea Refining & Petrochemical Company (RSNRPC) representing Egypt. On the other hand was the China National Chemical Engineering Company (CNCEC), a Beijing-based company. The companies signed a non-binding framework agreement to develop the project based in the Suez Canal Economic Zone. The signing took place at CNCEC’s headquarters in Beijing.
At the signing ceremony, Ibrahim Abdel Qadir Makki, chairman of the board of directors of the Egyptian Petrochemicals Holding Company (ECM) commended the project. He noted that the agreement represented a milestone in the development of a “promising” project. Furthermore, he noted that CNCEC had shown commitment in potentially contributing to the project’s capital. The potential support in a financing agreement also covers up to 85% of the value of the engineering, procurement and construction contract (EPC).
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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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