Saudi Aramco, Air Products and ACWA Power have signed an agreement outlining terms for setting up a gasification/power joint venture in Saudi Arabia with assets bought from the state energy giant.
“The JV will purchase the gasification assets, power block and the associated utilities from Saudi Aramco for approximately $8 billion,” said a statement.
According to the term sheet, U.S.-based Air Products will own at least 55 percent of the joint venture, to be set up in Jazan Economic City (JEC), with Saudi Aramco and ACWA Power owning the balance, the statement said.
The joint venture will own and operate the facility under a 25-year contract for a fixed monthly fee. Saudi Aramco will supply feedstock and the joint venture will produce power, hydrogen and other utilities for Aramco.
The statement said the assets are currently under construction and would be transferred to the joint venture upon start-up, scheduled in 2019.
“The JV will serve Saudi Aramco’s Jazan Refinery and terminal at JEC, a megaproject that will process heavy and medium crude oil to create liquefied petroleum gas, sulfur, asphalt, benzene and paraxylene, and add 400,000 barrels per day of refining capacity,” it added.
The JV builds on the importance and recognition that critical infrastructure assets in the region are being developed and operated under the Public Private Partnership (PPP) model.
“ACWA Power is committed to the expansion of the PPP model into the power sector. ACWA Power plays an important role in the power sector in the Kingdom and welcomes the opportunity to assist in the further development of the Jazan economic corridor,” said ACWA Power Chairman Mohammad Abunayyan.
“Furthermore, our collaboration with industry leading companies, Saudi Aramco and Air Products, is a direct result of the recognition of the need to innovate new structure as part of Vision 2030.”
The refinery on the Red Sea is part of a plan to revive the southwestern region by building an economic city which will help create thousands of jobs.
The consortium will increase job opportunities and transfer the most advanced technologies in this field to the Kingdom, and enable Saudi talent to employ this technology for the first time.
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has a total shareholding of 25 percent in Riyadh-based ACWA Power, a developer and operator of power and water plants.