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Thu 29 Sep 2016 01:53 PM

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Saudi's PetroRabigh says to delay $9.1bn expansion plans

Petrochemical company cites construction market challenges as it delays project by at least six months

Saudi's PetroRabigh says to delay $9.1bn expansion plans
Petrochemicals plant

Saudi Arabian petrochemical company PetroRabigh said on Thursday it would again delay completion of an expansion project, raising the cost of the project to 34 billion riyals ($9.1 billion), SR4bn higher than the original cost.

Completion will be postponed by at least six months to the second quarter of next year because of "construction market challenges", said PetroRabigh, a joint venture between national oil giant Saudi Aramco and Sumitomo Chemical.

It did not elaborate, but the Saudi construction industry has been hit hard in the past year by delays in government payments due to low oil prices. This has strained builders' finances and made it hard for them to pay suppliers and employees.

Under PetroRabigh's Phase II expansion, an existing ethane cracker will be expanded and a new aromatics complex will be built to process more than 2.7 million tonnes of naphtha a year into higher-value petrochemical products.

The expanded facility was originally expected to start production in the first half of 2016. But last Dec. 31, PetroRabigh said it would delay completion by nine months due to "the failure of the key contractors of the project to meet the planned implementation schedule", raising the estimated project cost by 1 billion riyals to 31 billion riyals.

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