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Agreement to Finance $12Bln Joint Venture to Acquire Southern Saudi Arabia’s Power Unit

Agreement to Finance $12Bln Joint Venture to Acquire Southern Saudi Arabia’s Power Unit

Tuesday, 28 September, 2021 - 08:45
A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. (Reuters)

Saudi Aramco, Air Products, ACWA Power and Air Products Qudra announced the signing of final agreements to finance a joint venture worth 45 billion riyals (USD 12 billion), for the acquisition of a power unit for air separation (ASU), gasification and electricity production in Jazan Economic City.

Aramco, via its subsidiary Saudi Aramco Power Company (SAPCO), has a 20 percent share in the Joint Venture, while Air Products will acquire 46 percent, ACWA Power 25 percent and Air Products Qudra 9 percent.

Air Products’ total ownership position is 50.6 percent by owning an additional 4.6 percent through Air Products Qudra.

According to the agreement, the Joint Venture (JV) purchases the ASUs, gasification, syngas cleanup, utilities and power assets from Aramco. The JV owns and operates the facility under a 25-year contract for a fixed monthly fee. Aramco will supply feedstock to the JV, and the JV will produce power, steam, hydrogen and other utilities for Aramco.

With the completion of the agreements, all parties to the JV expect the transfer of assets and financing to begin next October, while Air Products intends to hold a telephone meeting with investors at that time to inform them of the project’s details.

Senior Vice President of Refining, Processing and Marketing at Saudi Aramco, Mohammed Al Qahtani, said: “We are very pleased to reach this significant milestone. Aramco originally built the world’s largest integrated gasification combined cycle (IGCC) complex to employ gasification technology for the first time in the Kingdom and to keep pace with the development of the Kingdom’s Southern Province industrially and economically.”

“We believe the JV 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.

Chairman of the Board of Directors of ACWA Power, Mohamed Abunayyan, said that the agreement was the largest of its kind in the company’s history.

“The successful financial agreement concluded today is the largest agreement of its kind in ACWA Power’s history and highlights our continued firm commitment to the Kingdom’s Vision 2030 and its strategic goals for the energy sector.”

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