An aerial view of the Suez Canal Economic Zone in Ain Sokhna on Egypt's Red Sea. Photo: Anchorage Investments
An aerial view of the Suez Canal Economic Zone in Ain Sokhna on Egypt's Red Sea. Photo: Anchorage Investments
An aerial view of the Suez Canal Economic Zone in Ain Sokhna on Egypt's Red Sea. Photo: Anchorage Investments
An aerial view of the Suez Canal Economic Zone in Ain Sokhna on Egypt's Red Sea. Photo: Anchorage Investments

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Energy

Four global companies shortlisted for $2bn petrochemicals complex in Egypt

Anchorage Investments has selected Hyundai, Samsung, Technip Energies and Tecnicas Reunidas to compete to be the main contractor for Ain Sokhna project

Nada El Sawy
Nada El Sawy
Cairo

August 23, 2022

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Egypt’s Anchorage Investments has shortlisted four international companies to construct a $2 billion petrochemicals complex in the Suez Canal Economic Zone on the Red Sea.

These are South Korea's Hyundai and Samsung, Italy's Technip Energies and Spain's Tecnicas Reunidas, Anchorage Investments said on Tuesday.

Anchorage Investments, which develops and invests in industrial projects within the downstream oil and gas and mining-driven manufacturing sectors, had issued a tender for the Anchor Benitoite project in Ain Sokhna in March.

“The international companies that qualified for the second phase are world-class contractors who have proven track records and global experience,” said Ahmed Moharram, founder and managing director of Anchorage Investments.

“Our selection reflects how Anchorage Investments is keen to make the Anchor Benitoite project a lighthouse project that meets international standards and delivers for investors who are looking to strengthen their presence in Egypt.”

Scheduled to be completed within three years after the front-end engineering and design phase, the project aims to contribute to Egypt’s gross domestic project and increase its chemical exports and foreign direct investments.

Petrochemicals are derived from crude oil processed in a refinery. The derivatives are used to produce industrial chemicals, plastic products and synthetic rubber.

Egypt’s exports of petrochemicals and fertilisers rose 45 per cent last year, compared to 2020, to about $6.7bn, according to Minister of Petroleum and Mineral Resources Tarek El Molla.

The Mena region has shown a strong appetite for directing more funds to petrochemicals, the Arab Petroleum Investments Corporation said in a report in June.

For Egypt, the focus is “import substitution and value chain integration and monetisation”, such as producing materials that feed into other sectors like industry and agriculture and even aid in the green energy transition such as solar energy components, the Mena Energy Investment Outlook 2022-2026 report found.

Petrochemical complexes make up four of Egypt’s top 10 energy projects by value.

These are an $8.5bn El Alamein petrochemical complex, a $7.5bn petrochemical complex in Suez, a $4.29bn Suez Oil refining and petrochemical complex and a $3.71bn crude oil refining and petrochemical complex in Ain Sokhna, according to Apicorp.

The Anchor Benitoite project encompasses a number of production units producing a total of 1.75 million tonnes per year of petrochemical products and intermediates.

Meanwhile, the SCZone, which covers a 460-kilometre area, has so far signed nine memorandums of understanding with several global partners for the production of green fuel.

The economic zone said in a statement earlier this week that it expects to sign more MoUs “within the next few days to reach the largest possible number of final contracts by the Cop27 summit” that will be held at Red Sea resort Sharm El Sheikh in November.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Quick pearls of wisdom

Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”

Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.” 

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Updated: May 19, 2023, 4:40 PM
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