Saudi Kayan to retender two deals at mega complex

By Reem Shamseddine

KHOBAR, Saudi Arabia, Oct 18 (Reuters) - Saudi Kayan Petrochemical Co, a unit of Saudi Basic Industries Corp 2010.SE (SABIC), has reissued a tender for the construction of a low density polyethylene plant (LDPE) in Jubail, sources said.

Kayan 2350.SE has asked contractors to resubmit bids for the building of the 300,000 tonne per year (tpy plant) and a 210,000 tpy amines plant, contracting sources said.

The Kayan complex was due online in 2010 and will have an annual production capacity of 5.6 million tpy of petrochemical products.

Saudi-based contractors submitted their proposals last month for the LDPE project.

"We have submitted our proposals by Sept 27, they are under evaluation right now," one contractor said. "Everything will be finalised within this year; it (the plant) will take 25-26 months to be completed."

The retendering means that at least part of the plant would only be completed until 2012, contractors said. The first tender was awarded to UK Simon Carves, a unit of Indian Punj Lloyd (PUJL.BO), in 2007 as a fixed-price services contract.

"The contract Simon Carves had in Al-Jubail was a lump sum engineering services contract convertible, on mutually agreed and acceptable terms to both parties, to a lump sum engineering, procurement and construction ("EPC") contract," Punj Lloyd told Reuters in an e-mail.

"The parties have mutually agreed not to convert it into a lump sum turn key EPC contract.

Accordingly, the parties have decided to close the engineering services contract on mutually acceptable terms," Punj Lloyd added.

The amines plant was awarded to Samsung Engineering (028050.KS) in 2007. That deal will also soon be retendered to secure lower prices, three sources in the contracting industry told Reuters.

Saudi Kayan and Samsung declined to comment.

(Reporting by Reem Shamseddine; Additional reporting by Prashant Mehra and Meeyoung Cho; Editing by Kim Coghill)