Aramco, Acwa Power and Air Products agree to finance $12bn power joint venture in Saudi

Saudi Aramco has a 20 per cent stake in the project through its subsidiary Saudi Aramco Power Company. Reuters

A consortium of investors that include Aramco, Air Products, Acwa Power and Air Products Qudra reached an agreement for asset acquisition and project financing of a $12 billion air separation unit joint venture in Jazan Economic City in Saudi Arabia.

The unit serves Aramco’s Jazan Refinery, which processes 400,000 barrels per day of crude oil and produces ultralight sulphur diesel, gasoline and other products, Aramco said in a statement on Monday.

The joint venture is “central to the self-sufficiency of our megaprojects at Jazan,” said Mohammed Al Qahtani, senior vice president of downstream for Aramco.

It will “enhance the overall value of the refinery and integrated gasification combined cycle power plant, and aid in transforming the province by positioning Jazan Economic City for additional foreign investment and private sector involvement,” he added.

The consortium secured $7.2bn from the Saudi Industrial Development Fund and 23 local and international lenders, he added.

Saudi Aramco, the world's largest oil exporting company, is investing heavily in its downstream projects to extract more value from its crude oil production. It also reorganised its downstream business into four commercial units last year and said it plans to consolidate its downstream business under a separate, wholly owned unit before December 31, 2024.

The aforementioned joint venture purchases the ASUs, gasification, syngas clean-up, utilities and power assets from Aramco. The Saudi Arabian state oil company will supply feedstock to the joint venture, which will in turn produce power, steam, hydrogen and other utilities for Aramco.

The joint venture owns and operates the facility under a 25-year contract for a fixed monthly fee, the statement added.

Aramco has a 20 per cent stake in the project through its subsidiary Saudi Aramco Power Company, while Air Products owns a 46 per cent share, Acwa Power has 25 per cent and Air Products Qudra 9 per cent.

Air Products’ total ownership position is 50.6 per cent since it also has an additional 4.6 per cent through Air Products Qudra.

With the completion of these definitive agreements, all parties under the joint venture expect asset transfer and funding to occur in October of this year. Air Products said it intends to conduct a public investor call at that time.

The project is also expected to increase job opportunities for citizens and will enable Saudi talent to employ this technology for the first time, Aramco said.

“Jazan IGCC is set to be the largest integrated project for gasification and combined cycle energy production in the world. Bringing the most advanced technologies to the kingdom, the Jazan project will push the boundaries,” said Mohammad Abunayyan, chairman of Acwa Power.