Maximum benefitsJune 5, 2019
TOGY talks to Abdel Mageed Hegazy, chairman and CEO of The Egyptian Ethylene and Derivatives Company (Ethydco), about the company’s achievements and expansion plans, the nature of Egypt’s petrochemicals market and the significance of having syndication and the support of local banks. Ethydco produces polyethylene, ethylene and polyethylene byproducts at the largest petrochemicals complex in Africa.
What have been Ethydco’s main milestones since its recent establishment?
Ethydco is a new company. Our business started in 2016 and we are now the leading and biggest petrochemicals company in Egypt.
We operate four plants. The first plant produces ethylene with a capacity of 460,000 tonnes per annum. The second plant produces butadiene as a byproduct, with a capacity of 20,000 tonnes per annum. The third plant is a polyethylene plant with a capacity of 400,000 tonnes per annum, producing both linear low- and high-density polyethylene. The fourth plant is a utility plant engaged in power generation to be used internally and with excess output exported to the national grid.
What are Ethydco’s plans following the acquisition of Solvay Alexandria Sodium Carbonate?
We have recently acquired Solvay Alexandria Sodium Carbonate. It will operate under the name Petrochemical Logistics Services company, or PLS. Its shareholder structure is Ethydco as the major shareholder with 60% of the shares, while Echem [Egyptian Petrochemicals Holding Company] owns 20% and Sidpec [Sidi Kerir Petrochemicals Company] owns the remaining 20%.
PLS’ significant location close to the Mediterranean enables Ethydco to build a tank farm to secure its needs of necessary feedstock. Phase one will work as a facilitator to store petrochemical products in order to be exported to various countries, and an aggressive plan in this regard will be finished during the coming years. We will export bulky products as well as the byproducts, such as butadiene. Phase two will develop jetty infrastructure to be able to receive vessels.
What is Ethydco’s production chain, and do you have plans to add to that?
We make use of natural gas as feedstock and maximise the output of it by producing ethylene under an ABB Lummus licence; polyethylene under the Univation licence, which enables us to produce up to 20 different grades; and butadiene under the license of BASF.
We are now in the midst of a bidding phase for the EPC contractor, to start a new polybutadiene plant that will be producing PBR [polybutadiene rubber] with total production capacity of 36,000 tonnes per year.
Is there enough space in the Egyptian market for the several major petrochemicals projects that are underway?
The key thing is that they are not competing; as a matter of fact, they are complementing one another. It is the same case with Ethydco and Sidpec. We are integrated; we are not competitors. This is the Egyptian petroleum sector’s policy throughout all phases.
What should be done to realise the full potential of Egypt’s refining capacity?
We are planning to start a petro-refinery project, to link crude refineries and petrochemicals. Echem is considering the construction of a refining and petrochemicals complex in El Alamein, and this would be a mega-project. This would be derived from crude oil and extend throughout the whole supply chain to petrochemicals, accomplished via naphtha cracking. It will maximise the benefit of subsidiary and sister companies’ integration.
Is Ethydco planning to augment the capabilities of its plants?
Ethydco now has two production lines and we are planning to increase the polyethylene plant by 50%, adding a third polyethylene train, especially to produce pipe-grade polyethylene.
We already produce pipe-grade polyethylene PE 80 and PE 100, and are now studying to add a third train to the plant to produce PE 125, with the latest technology from Chevron Phillips Chemical Company. This plan is under study and we expect to start the EPC licence process within six months. In parallel, we will also develop the tank farm I mentioned earlier.
How important are your certifications in gaining international credibility?
In 2018, we proudly earned different prestigious certificates. Ethydco was granted the ISO 9001:2015 certificate for Total Quality Management System, ISO 14001:2015 certificate for Environmental Management System, OHSAS 18001:2007 certificate for Occupational Safety and Health Management System and the ISO 50001:2011 certificate for Energy Saving Management System.
All of these certificates were awarded in one year, which qualifies Ethydco to be the first company entitled to claim such an achievement. In addition, we are preparing all needed procedures and requirements to get the licence of ISO 17025:2017 for General Requirements for the Efficiency of Testing and Calibration of Laboratories as well as ISO 27001:2013 for Data Secrecy & Protection.
Ethydco meets all required international standards. Our products even have their own certificates, such as the European Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals and the L’Oréal approval for our Advancene blow moulding grade.
Our products meet international environmental standards as well. We have also joined the United Nations Global Compact and Ethydco is a Responsible Care member. All of these certifications undoubtedly open international markets to our products.
What technologies does Ethydco apply?
Ethydco’s success story started with a planned project years ago, and this has been in operation for one and a half years. We use natural gas as feedstock, not naphtha cracking, which is more technologically advanced and more economically efficient.
We apply ABB Lummus technology for ethylene production and Unipol technology for polyethylene production, and have a BASF licence for butadiene production. Our main EPC contractor was Toyo from Japan, besides the local subcontractors such as Petrojet and Enppi.
What challenges did Ethydco face in achieving 100% local financing?
We closed the financing phase with local banks after two years of reviews. The total capital structure is 35% equity and 65% debt. It was very challenging; local banks had to generate foreign currency while the country was in instability mode.
Now, after 18 months of operation, we have successfully paid back 45% of the loan burden. Since then, Ethydco has had a positive and attractive cashflow.
As we export about 80% of our production and keep 20% for the local market, we are quite flexible in foreign currency, which has Ethydco in a better financial position, encouraging all national banks to top up and/or grant Ethydco new loans for future expansion projects.
Does Ethydco’s utility plant have capacity for further expansion?
We own and operate three Siemens gas turbines in the power plant, two of which are in service and one of which is a back-up on standby mode.
We have two methods for trading electricity. One is directly, with cables to neighbouring companies such as Sidpec, with which we have already signed an agreement. The other one is indirectly through the national grid. In [March 2019] we will connect to the national grid to sell the surplus electricity our utility plant produces, which is about 40 MW.
We have a new project in power generation. Current power generation is based on a simple-cycle plant, but in the next two or three months [by April or May] we will start phase three, which is a combined-cycle plant, also using Siemens’ technology. Now, we generate about 90 MW and after phase three, we will have reached 150 MW.
What is your vision for 2019?
Our vision for 2019 is to provide for the electricity needs of Sidpec and Gasco. Moreover, our intention is to sell the output power surplus to the national grid. We also have the ambition to expand and build a third train, specifically dedicated to P 125, under a Chevron Phillips licence, where the total production capacity will reach 600,000 tonnes per annum. And last but not least, we plan to move forward to phase three of generating power via the combined-cycle plant.
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