TAHRIR Petrochemicals Complex

TAHRIR Petrochemicals Complex

By Tamer Mahfouz

The current administration aspires to make the Suez Canal and the area surrounding it the spearhead of Egypt’s economic revival and its investment hub. The region has mega projects that depend on the Suez Canal for their economic feasibility, such as the Suez Canal Economic Zone (SCZone). and the New Administrative Capital, which part of its economic lure is its connection both to the SCZone and the seaports at the southern tip of the Suez Canal.

In addition to these national projects, the largest petrochemicals complex in Egypt is currently being built in SCZone. Dubbed the Tahrir Petrochemicals Complex, the $10 billion complex will be built by Carbon Holdings, a private company established in 2008 that specializes in the construction of petrochemical plants. The complex will be built on the northern outskirts of Ain Sokhna. Its exports are forecasted to equal 25% of Egypt’s oil and non-oil exports, according to Carbon Holdings. Production is set for 2019.

Given the scale of the plant, supplying it with crude could prove a challenge, especially as it is unclear whether the new plant will use Egypt’s heavy crude, which is cheap and abundant though complex and expensive to refine, or the lighter variant imported from the Gulf Cooperation Council (GCC) countries and Libya. This decision could have a noticeable effect on Egypt’s crude oil imports and exports, depending on where the oil comes from and how much will be re-exported.

In Figures: Egypt’s Refining Industry

Despite a slow growth rate, Egypt is the biggest oil refiner in Africa in terms of the number of operational refineries. The sector’s investments topped EGP 724.5 million for oil refining and EGP 48 billion for petrochemicals in fiscal year [FY] 2015/2016, according to the Central Bank of Egypt (CBE).

To meet domestic demand, the government paid around $9.67 billion to import refined oil products during FY 2016/2017, according to CBE. This was roughly equal to 17% of Egypt’s imports. Meanwhile, petrochemicals exports totaled $2.7 billion during the same year, accounting for almost 12.5% of all exports.

The Complex

Taking three years to build, the Tahrir Petrochemicals Complex should be ready by the end of 2019. During the construction phase, the complex is expected to create 20,000 temporary job opportunities, according to Ahmed El Kharashy, the Managing Director of Business Development at Carbon Holding, as reported by Construction Business News. The complex will be built on 5 million square meters in close proximity to Ain Sokhna Port. Once completed, it should create around 50,000 direct jobs and 25,000 indirect job opportunities, according to El Kharashy. To be financially feasible, the company forecasts that its revenue should top $6 billion.

The cost of the complex is estimated at $10 billion, according to El Kharashy. Of this total cost, approximately $3.4 billion is planned to come from international funding agencies, such as the U.S. Export-Import Bank, the Export-Import Bank of Korea, the Korean Insurance Corporation, and the Italian Export Credit Agency. Meanwhile, the government announced that it will be paying the remaining $6.6 billion until 2020.

The Tahrir Petrochemicals Complex is split into three separate sites. The first site is where the naphtha cracker facility is located. Its maximum annual production capacity will be around four million tons, making it the biggest in the world, according to El Kharashy. The second site is dedicated to facilities that produce associated oil derivatives. The last site has three polyethylene units with a forecasted maximum annual production capacity of 1.4 million tons of both ethylene and polyethylene, 900,000 tons of propylene, 250,000 tons of butadiene, 350,000 tons of gasoline, and 100,000 tons of hexene-1. Another separate production line will have a maximum annual production capacity of 1,060 tons of ammonium nitrate. Also in the complex will be two polypropylene production facilities.

To support this production process, the Tahrir Petrochemicals Complex will feature a 3,800 cubic meter water desalination facility to treat seawater coming from the Red Sea, which will be necessary for production. There will also be a 300-megawatt (MW) power plant to ensure a continuous supply of electricity to the plant.

To execute the project Carbon Holdings commissioned a number of high-profile multinational firms. It signed a contract with Foster Wheeler, a multinational project management firm, to handle the complex’s project management operations. The value of the contract has not been disclosed. KBR, another multinational that provides engineering and technology support services, has been retained to carry out a feasibility study and the front-end engineering design works for the ammonium nitrate plant. SK E&C, a Korean developer and large-scale infrastructure builder, is the consultant on the polyethylene plant. Linde Group, a German chemicals company, will serve as the consultant for the ethylene plant. The value of the contracts with SK E&C and Linde Group total $3.6 billion.

To secure engineering, procurement, construction and commissioning services, Carbon Holdings signed contracts with specialized companies, Maire Tecnimont for $1.7 billion, Archirodon Group for $1.95 billion and Drake & Scull International for $599 million. Maire Tecnimont will build the utilities center, seawater desalination plant, wastewater treatment plant, power plant, and auxiliary packages and systems. Archirodon Group will supply the tanks, jetty works and pipelines. Lastly, Drake & Scull International will construct the storage facilities and ancillary buildings. Furthermore, General Electric was contracted by Carbon Holdings to supply the aero gas turbines, steam turbines, generators, water filtration and desalination equipment as well as compressors and other equipment for $500 million. To develop the automation processes and ensure reliability, Carbon Holdings signed a $150 million contract with Emerson Process Management.

Other than announced capacity there are no official production figures forecasted for the complex; however, its exports are projected to account for 25-30% of the dollar value of Egypt’s total exports, according to El Kharashy. He added that the complex’s exports will be mostly directed to strategic markets in Europe and North America.

Finding Supply

It is unclear how much crude the Tahrir Petrochemicals Complex will require to reach the forecasted $6 billion revenue mark. What is clear, however, is that given the huge production capacity of the complex, supplying it will likely either significantly eat into Egypt’s heavy crude oil exports, estimated at $3.8 billion during FY 2016/2017 according to CBE, or significantly increase the country’s imports of light crude oil, which were at $1.5 billion in FY 2016/2017. This decision will greatly depend on whether the Tahrir Petrochemicals Complex will be equipped to refine heavy or light crudes—or both.

As it stands the Egyptian government is in negotiations with Iraq for an additional one million barrels of Basra Light every month, Bloomberg reported in November, quoting the former Head of the Egyptian General Petroleum Company (EGPC), Tarek El Hadidi. “This will be a good way to secure our crude supplies,” said Hadidi during an oil conference earlier in the year, adding “we are trying to have an agreement with other countries as well […] government to government deals.” Earlier in the year, the Egyptian government successfully negotiated with the Iraqi government to supply it with one million barrels of oil a month for 12 months. Negotiation with Libya started after Saudi Aramco decided to halt its monthly supply of around 700,000 barrels of Arab Light to Egypt in late 2016.

Meanwhile, the Egyptian government is still negotiating with Saudi Aramco for a resumption in 2018 of the 700,000 barrels per month that it previously received from the company, according to a November article by Bloomberg. “Instead of shipping the products from Aramco, we could get the crude from Aramco and process it in our refineries in Egypt,” said Tarek El Molla, the Minister of Petroleum and Mineral Resources in mid-November, as reported by Bloomberg. “With the good business relationship that we have, we can develop new horizons and new types of contracts and deals.”

Overall though, finding suitable crude oil to be processed by the Tahrir Petrochemicals Complex should not prove difficult given that most of the major regional oil exporters are exporting crude oil to be processed elsewhere. The key to securing sufficient supply for the complex, however, lies with the willingness of the Egyptian government to pay international market prices rather than discounted prices—such as it has from Iraq and Saudi Arabia.

The difficulty of negotiating such agreements is that the countries that rely on crude oil exports have seen huge declines in local oil investments and their respective foreign-currency reserves since mid-2014 when oil prices more than halved before eventually settling at around $50 to $60 a barrel. Such difficulties will continue going forward despite the recent hike in global crude oil prices. Oil-exporting countries will see the price hike as an opportunity to recuperate at least a portion of their losses.


While no regional country has as many operational refineries as Egypt, the production capacity of some of these plants are much higher than Egypt’s refineries. For example, Egypt’s largest refinery, MIDOR, has a maximum production capacity of 100,000 barrels a day (b/d), comparing its production with UAE’s five operational refineries the story will show different results. The biggest of them is the Abu Dhabi-based Ruwais Refinery, which can refine 400,000 b/d. It is owned by Abu Dhabi National Oil Company (ANDOC), the owner of the country’s second largest refinery, the Jebel Ali Refinery, which has a refining capacity of 140,000 b/d.

Similarly, Saudi Arabia has ten operational oil refineries, five of which are owned solely by Saudi Aramco. The rest are partly owned by Saudi Aramco. The largest refinery in Saudi Arabia is the Ras Tanura Refinery. Recent upgrades have seen the plant’s maximum capacity reach 550,000 b/d. The refinery produces high-octane gasoline and diesel and has an LPG plant, among other facilities. Other large refineries, which produce around 400,000 b/d, are the Jazan Refinery, which opened in 2016 and is solely owned by Saudi Aramco; the Yasref Refinery, which is jointly owned by Saudi Aramco and Sinopec; the Jubail Refinery, which is jointly owned by Saudi Aramco and Total; the Yanbu Refinery, which jointly owned by Saudi Aramco and ExxonMobil; and the Rabigh Refinery, which is partially listed on the Saudi Arabian stock exchange and is co-owned by Saudi Aramco and Sumitomo Chemical.

A lost opportunity?

For some, the real opportunity for the Tahrir Petrochemicals Complex will be to refine the locally-produced heavy crude—something few refineries in the world can do. This strategy would mean lower supply costs for the state as well as higher profit margins for Carbon Holdings which would be using locally-supplied heavy crude, a cheaper product then imported light crudes.

Focusing on refining heavy crudes could additionally pay dividends in the long run. As global crude oil reserves decline, heavy crude oil will be increasingly easier to find than the light crude oil, which has long been in high demand by refineries around the world. “In general, crudes are trending heavier,” said Jeff Hazle, the Technical Director at the National Petrochemical and Refiners Association, in an interview with Rigzone. He noted that refineries around the world are already facing this reality. Cindy Schild, Refining Issues Manager with the American Petroleum Institute (API), points out that the available crudes are simply not as sweet as they used to be. This has pushed refiners to invest in more flexible and complex plants so that they can refine both heavy and light crudes.

Conversion has already started in the US and Canada. Refineries, such as Marathon, Motiva, and Husky, have either begun upgrades to their facilities or announced plans to do so. Meanwhile, Hyperion Resources has gone further by announcing the construction of a 400,000 b/d heavy oil refinery. Elsewhere in the world, Venezuela-based Petrobras and Petroleos de Venezuela are jointly building a 200,000 b/d refinery in Brazil. GS Caltex in South Korea announced the addition of a new heavy oil unit at one of its refineries to produce gasoil and other products. In India, Reliance Industries announced a 580,000 b/d facility that will also refine heavy oils.

The Tahrir Petrochemicals Complex could have a distinct long-term advantage over other refineries in the region because it is still under construction, making it easier and cheaper to adapt it for the processing of heavy crudes.


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