Aramco, Air Products, ACWA Power, Air Products Qudra sign asset acquisition, financing agreements for $12 bln JV

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Aramco, Air Products, ACWA Power and Air Products Qudra announced today, Sept. 27, the signing and finalization of definitive agreements for the asset acquisition and project financing of the $12 billion (SAR 45 billion) air separation unit (ASU)/gasification/power joint venture (JV) in Jazan Economic City.

Saudi Aramco, via its subsidiary Saudi Aramco Power Co. (SAPCO), has a 20% share in the JV, the world’s largest oil exporter said in a statement.

On the other hand, Air Products owns 46%, ACWA Power (25%), and Air Products Qudra (9%). Moreover, Air Products’ total ownership position is 50.6% by owning an additional 4.6% through Air Products Qudra.

The JV is purchasing 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 it will produce power, steam, hydrogen and other utilities for Aramco.

The JV serves Aramco’s Jazan Refinery, a megaproject to process 400,000 barrels per day of the crude oil to produce the main products, such as ultra-light sulphur diesel, gasoline, and other products.

With the completion of these definitive agreements, all parties under the JV expect asset transfer and funding to occur during October 2021. Air Products intends to conduct a public investor call at that time.

Mohammed Al Qahtani, Senior Vice President of Downstream, Aramco 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. This JV is meant to be central to the self-sufficiency of our megaprojects at Jazan. 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.”

Additionally, the Saudi Industrial Development Fund (SIDF) and 23 local and international lenders are also engaged in this transaction securing a total of $7.2 billion (SAR 27 billion).