Drake & Scull seals Dh2bn agreement for Suez Canal project

Drake & Scull International has completed a Dh2.2 billion deal to help construct utilities and offsite facilities at a new petrochemicals complex at the entrance to the Suez Canal, where the world’s largest naphtha cracker is to be built.

DSI, a mechanical, engineering and plumbing specialist, signed an agreement with the Egypt-based company Carbon Holdings to build storage facilities and ancillary buildings as part of the Tahrir Petrochemical project in Ain Sokhna, Egypt.

Under the terms of the agreement, DSI will join a consortium of companies undertaking engineering, procurement, construction and commissioning activities for facilities outside the refinery. These include the Italian-based Maire Tecnimont and Greek-based Archirodon Group.

Carbon Holdings plans to start construction of its US$5bn-plus Tahrir project in 2015. The company is seeking to secure more than $3.4bn of funding and loan guarantees from a consortium of US, Korean and Italian financiers.

Once complete, the project will comprise a 4 million tonne-a-year naphtha cracker and related downstream facilities with the capacity to produce polyethylene, propylene, butadiene, benzene and hexene-1.

The project, which will include Egypt’s first naphtha cracker, aims to exploit oil produced in the country’s onshore and offshore oilfields.

Drake & Scull is attempting to increase its projects in the high margin and highly specialised oil, gas and rail sectors to diversify away from its reliance on the cyclical UAE construction market.

“DSI is pleased to be part of this international consortium delivering this vital project, which will transform Egypt’s petrochemical sector,” said Khaldoun Tabari, the chief executive of DSI.

“Egypt is our key market in North Africa and the project will enable us to further strengthen our position in the country, where we already have a significant presence across the oil and gas, waste water and water treatment and hospitality sectors.”

On Monday DSI announced that first-quarter profits slumped 27.1 per cent compared with the same period the previous year as the company suffered from project delays at its Saudi Arabian schemes.

Shares in DSI fell 1.17 per cent in trading yesterday to close at Dh1.69. The stock has slid continuously since Thursday, losing 5 per cent of its value since then.

“This is an important contract for Drake and Scull,” said Sebastien Henin, the head of asset management at The National Investor. “It represents around 20 per cent of the company’s current backlog and is both positive news in its own right and represents a good way of helping the company diversify away from the UAE and Saudi Arabia, where the company has suffered a number of setbacks. However, from a political point of view expanding in Egypt at the moment could also be considered quite risky.”

lbarnard@thenational.ae

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