Eleme Fertilizer

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The Indorama Corporation (“Indorama”) is an Indonesian based multinational company operating in 19 different countries and a leading manufacturer of petrochemicals and associated downstream products such as polyethylene, polypropylene, polyester fiber, filament, spun yarns and fabrics. In 2006 the Government of Nigeria privatized the Eleme Petrochemicals Company located in Port Harcourt, the capital city of Rivers State. At the time IFC provided an investment to Indorama to acquire a 75% equity stake in the Company which was renamed Indorama Eleme Petrochemicals Limited (“Eleme” or the “Company”). The current shareholding is: the Indorama Group 65%, Nigerian National Petroleum Corporation (“NNPC”) 10%, Rivers State Government 10%, Host Communities 7.5%, the Nigerian Federal Government 5%, and Employees 2.5%.IFC is no longer invested in Indorama and is currently considering a $300 million loan to Eleme to support development of a new urea-based fertilizer plant. The current operations are located on a 360 hectare site west of central Port Harcourt. Approximately 50% of the site is developed and thus there is sufficient space to accommodate the new plant. Existing operations on the site include an Olefins Plant that produces 330,000 tons of ethylene and 126,000 tons of propylene annually. The primary feedstock for the Olefins plant is Natural Gas Liquid (“NGL”) which is supplied by the Nigerian Agip Oil Company (“NAOC”), a joint venture between Agip and the Nigerian National Petroleum Corporation, via an 84 kilometer pipeline from a gas collection and separation plant (gas plant) located in OBIAFU /OBRIKOM. The ethylene is used in the Polyethylene Plant to produce high and low density polyethylene with a total combined capacity of 320,000 tons per year. Propylene is used in the Polypropylene Plant to manufacture 120,000 tons of polypropylene polymers per year; these are used in the various applications including the production of materials associated with packaging and labeling, textiles and plastics amongst others. The facility also has two nitrogen plants that produces 4,400 Nm3 of nitrogen gas and 10 metric tons (“MT”) of liquid nitrogen per day. Power for the facility is generated via two out of four available natural gas turbines with a total power generation capacity of 132 megawatts (“MW”) and there are 3 steam turbines for the Olefins Plant. The new fertilizer plant will be located within the confines of the existing site and occupy some 38 hectares. The main project components involve an Ammonia Plant, a Urea Plant and Urea Granulation plant. The Ammonia Plant will produce 2,300 tons of ammonia per day that will be transferred to the Urea Plant, though in the event that the Urea Plant is not operational, the ammonia would be fed to a storage tank. The Urea Plant will produce 4,000 tons of granulated urea which will either be exported via the port or sold in the domestic market. With the exception of natural gas that will be transported to the site via a new pipeline to be constructed, all the utilities required for the operations such as power, air and nitrogen will be supplied via existing on-site facilities.The new gas pipeline for the fertilizer plant will be constructed by Eleme within an existing 15 m Right of Way (“RoW”) in which there are currently two existing gas pipelines; both of these traverse the RoW between Eleme and the gas plant at OBIAFU /OBRIKOM. The new gas pipeline will be operated by NAOC to ensure synergy in overall operations of all the three pipelines (the new gas pipeline and two existing pipelines within the same RoW). In addition, a new Port Terminal (jetty) will be built at Onne Port on a plot of land some 6 ha in extent and owned by the Nigerian Port Authority (“NPA”). The land has been leased to Oil Industrial Service Limited (“OIS”) for a period of 25 years commencing November 2005, and the lease is renewable for a further 25 years. Eleme and OIS will form a Joint Venture Company (JVC) with a shareholding ratio of 51% retained by Eleme, and 49% by OIS; Eleme will provide the investment for construction of the jetty. The jetty operations will be managed by JVC and will include a quay with a water front measuring 320 m comprised of two berthing sections. Berthing Section-1 will measure 180 m and be suitable for accommodating urea vessels with a length overall (“LOA”) of up to 180 meters to serve Eleme. Berthing Section-2 will measure 105 meters and serve OIS; this will be suitable for vessels with a LOA of up to 105 meters and accommodate break bulk, pipes and containerized cargoes. In addition to the quay, there will be terminal infrastructure including all material handling facilities necessary for urea and a urea storage facility with a capacity of 45,000 MT. Other facilities as required for operation of the jetty will include a site office, generators, a control room, parking areas, a weighbridge and fire fighting facilities. The transfer of urea from the fertilizer plant will be by road via an existing road network.Construction of the new fertilizer plant will commence in early 2013 with commissioning in late 2015. The start dates for construction of the jetty and gas pipeline are still to be confirmed, however given the need to be operational once the fertilizer plant is commissioned, construction of the jetty and gas pipeline are expected to commence in 2013.