Aug. 9. 2005
Marubeni Corporation, as Managing Partner in a consortium including JGC Corporation, Itochu Corporation, both of Japan, and ACWA Power Projects of Saudi Arabia, has successfully concluded negotiations with Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Company Ltd. (Sumitomo Chemical) of Japan to develop a fuel oil-fired cogeneration and desalination plant for the Rabigh Refinery and Petrochemical Complex in the Kingdom of Saudi Arabia on a build, own, operate and transfer basis. The concession, as stipulated in the Water and Energy Conversion Agreement (the WECA) signed on 7th August, 2005, is for an initial term of 25 years.
Saudi Aramco and Sumitomo Chemical (the Partners) have joined forces to develop one of the world’s largest integrated refining and petrochemical complexes at the Red Sea town of Rabigh on the west coast of Saudi Arabia. A total of 2.2 million tons of olefins, along with large volumes of gasoline and other refined products, will be produced annually upon completion.
The contract for the engineering, procurement and construction (EPC) of the new cogeneration and desalination plant was awarded to Mitsubishi Heavy Industries Ltd. (MHI) on a full turn-key basis and was also signed today.
The Marubeni consortium will establish a special purpose company resident in Saudi Arabia to act as the corporate vehicle for the project. The new company will move swiftly to conclude the remaining project and finance agreements in preparation for financial closing currently targeted for 31 December of this year. The newly constructed plant is scheduled to enter into commercial operation in June 2008.
The Marubeni Consortium submitted its offer on 30 April of this year following an international request for proposals issued by the Partners. After a rigorous commercial and technical evaluation, the Consortium was selected as Preferred Bidder in June and successfully concluded the WECA today. In addition to the competitive tariff that the consortium submitted, Marubeni’s global experience as an IPP developer, JGC’s rich experience as an EPC contractor with each of the Partners, Itochu’s experience in the water business in Saudi Arabia, ACWA Power Projects’ local experience and recent success in the IPP business in the Kingdom, and MHI’s long tradition both as an equipment supplier and EPC contractor to each of the Partners all contributed to the success of the Consortium.
For both Marubeni and JGC, success in Rabigh follows the award in January 2005 of the Taweelah B IWPP in Abu Dhabi, in which Marubeni also acted as the Lead Developer. The Taweelah B IWPP is the largest independent water and power project to be financed on a non-recourse basis to date.
Relying on these successes, Marubeni intends to broaden its presence in the IPP market in MENA by participating actively in the many tenders expected to be launched in the next few years. Marubeni strongly believes in the business fundamentals of the MENA IPP market and considers the regionan anchor for its future growth as an IPP developer.