Saudi Arabia's industrial giant Saudi Basic Industries Corp (Sabic) said one of its units, the Saudi Arabian Petrochemicals Company (Petrokemya), has awarded Japan's Toyo Engineering a contract to build a petrochemical plant on a turnkey basis.

Sabic, which accounts for around five per cent of the world's petrochemical production, said the project would use technology provided by Union Carbide.

Petrokemya is a fully owned subsidiary of Sabic, which itself is 70-per cent owned by the Saudi government. The statement quoted Sabic's managing director Mohammed Al Mady as saying the plant would have a production capacity of 400,000 tonnes a year of polyethylene and was expected to come on stream in mid-2002.

He also said Petrokemya would get a new 1.2 million tonne olefins complex to produce ethylene, propylene and benzene. Set up in 1981, Petrokemya produces around 2.3 million tonnes of ethylene, propylene, polystyrene, butene-1, butadiene and benzene per year.

Sabic controls and operates 16 complexes with international firms to produce petrochemicals, fertilisers, steel and plastics. Last year, Petrokemya secured a $600-million syndicated loan from local and international banks to finance expansion.

The Saudi giant also announced that its affiliate, Al Jubail Fertiliser Company (Samad), had signed a contract with Swiss-based Ammonia Casale to boost output by 10 per cent at its ammonia plant.

Sabic said that under the engineering and procurement contract, Samad's ammonia production would increase by 10 per cent to around 433,000 tonnes per year by late 2001.

It said the agreement was aimed at improving Samad's profitability. Samad is a 50-50 joint venture between state-owned Taiwan Fertiliser Company and Sabic, which is itself 70 per cent owned by the Saudi government.