Red Sea National Petrochemicals Co. (Red Sea Co.) and China National Chemical Engineering Co. Ltd. (CNCEC) have signed a non-binding framework agreement for the construction of a petrochemical facility in Egypt’s Suez Canal Economic Zone (SCZone), according to Zawya.

The deal between the two companies was signed in Beijing – showcasing the two nations’ increasing ties, China’s push to invest in energy projects across the Middle East and Africa, and Egypt’s drive to increase domestic petrochemical production.

Currently, the new project is one of Egypt’s most prominent, with Chairman of Egyptian Petrochemicals Holding Company (ECHEM) chairman Ibrahim Abdelkader Mekky noting that the agreement marked a “milestone on the road to executing a promising project that will enhance Egypt's export capacity and create broad development opportunities,” according to Zawya.

The official added that CNCEC was willing to add to the project’s capital by offering financing that would cover around 85% of the value of the Engineering, Procurement and Construction (EPC) contract.

Key factors worth considering for the project include its strategic location on the banks of the Suez Canal – a key global shipping channel – as well as the availability of production unit licences, Mekky underscored.

The ECHEM chairman also remarked that these advantages would make the facility a highly attractive location for investment – particularly as global demand for products such as polyethylene and polypropylene increases.

Mekky concluded that: “Cooperation with CNCEC is witnessing rapid development, as three major contracts were signed this year with TCC, a subsidiary of the Chinese group, at a combined value of nearly $1bn,” adding: “These agreements include projects to produce soda ash, silicon, and bioethanol, as part of Egypt's efforts to reduce dependence on imports and localize strategic industries”.

Additional petrochemical projects under development in Egypt includes a proposed $7bn petrochemical complex in New Alamein City which is expected to produce 3.1mn tonnes per year of eight specialised products.

According to UK-based wealth and asset manager Shard Capital Partners – who revealed the project in February this year – the plant will use crude as its primary feedstock and includes a “refinery and a mixed steam cracker unit designed to achieve one of the highest global conversion rates”.

A Framework Agreement for the project was first signed on 19 February between Shard, Saudi Arabia’s Al-Qahtani Group, UAE-based Royal Strategic Partners and the Egyptian Ministry of Petroleum and Ministry of Investment.

Shard added that it would also be holding initial discussions with Orascom Construction for “investment in the construction and operation of the complex outside battery limits on a Build-Own-and-Operate basis”.