Kuwait Petrochemical Industries Company (PIC) said it has reached an agreement with Canada-based Pembina Pipeline Corporation to jointly build a 550,000 tonne per annum integrated propane dehydrogenation and polypropylene ((PDH/PP) upgrading facility plant at an investment of C$$4.5 billion ($3.42 billion).

The new PDH/PP facility is being set up through a joint venture entity, Canada Kuwait Petrochemical Corporation (CKPC), said a statement from the company.

The project will help solidify Kuwait's position as a world-class petrochemical hub, which fits into PIC's plans of seeking more exposure abroad, it added.

CKPC, among the Kuwaiti petrochemical firm's first foreign forays, brings together two strategically aligned organisations, with complimentary strengths, united in developing and operating a world-scale Alberta PDH/PP Facility.

PIC brings comprehensive PDH and PP project experience, along with diversified global petrochemical marketing expertise, while Pembina will manage long-term propane supply and provide Alberta-specific operating and project execution experience, feedstock connectivity and strong producer relationships, the company said in a statement.

PP is a high value polymer, which can be cost-effectively transported, using existing third-party infrastructure, throughout North America and to global markets.

A fully-recyclable product, PP can be used in a wide range of finished items including automobiles, medical devices, food packaging and home electronic appliances.

The market for PP continues to see favourable long-term fundamentals with global PP demand growth outpacing global economic growth, said a senior official.

Kuwait's PIC, which has extensive global marketing experience and worldwide sales presence, will be fundamental in ensuring CKPC becomes a PP supplier of choice for customers, remarked its CEO Mohammed Abdullatif Al Farhoud.  

"The PDH/PP Facility is ideally aligned with PIC's continued pursuit of sustainable and globally-diversified growth," stated Al Farhoud.

"Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta by developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government," he added.

Calgary-based Pembina is a leading transportation and midstream service provider that has been serving North America's energy industry for over 60 years. It owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada.
 
The new plant will be strategically located in Alberta's Industrial Heartland, adjacent to Pembina's Redwater fractionation complex and will consume 23,000 barrels per day of local propane from RFS and other regional fractionation facilities.

Ideally located in the Western Canadian Sedimentary Basin, the facility will have long-term access to an abundant supply of propane feedstock, with a structural cost advantage when compared to other North American facilities, it stated.   

The new PDH/PP Facility is expected to be in-service in mid-2023, subject to environmental and regulatory approvals, and is expected to generate annual run-rate adjusted ebitda of $275 to $350 million, net to Pembina.

Pembina's President and CEO Mick Dilger said: "Sanctioning of the PDH/PP Facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers' hydrocarbons produced in western Canada, and provides another exciting platform for future growth."

"Today's announcement is the culmination of many years of hard work with our partner to develop a project that is well positioned to capitalize on Alberta's abundant supply of propane and undertake value-added processing that benefits all of Pembina's stakeholders, the Province of Alberta and indeed all of Canada," noted Dilger.

"It has been a pleasure to work with PIC and our strong partnership has helped mitigate the risks of entry into this new market segment," he added.-TradeArabia News Service