August 12, 2018 / 5:00 PM / in 9 days

UPDATE 1-Aramco, Air Products, ACWA to form JV in Saudi Arabia

(Adds details)

DUBAI, Aug 12 (Reuters) - Saudi Aramco, Air Products and ACWA Power signed on Sunday 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,” they 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 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.

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. (Reporting by Ghaida Ghantous; editing by David Stamp)

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