Apicorp boosts stake in Egyptian chemical firm
Dubai, October 22, 2013
Canada's Methanex agreed to sell a 10 per cent stake in Egyptian methanol producer EMethanex to one of its joint venture partners Arab Petroleum Investments Corp (Apicorp) for $110 million, Apicorp said on Tuesday.
The move follows a series of Egyptian asset sales by other Western companies such as Apache Corp. which in August sold 33 per cent of its Egyptian business to state-owned Chinese oil giant Sinopec for $3.1 billion, following investor concerns over its exposure there.
Political upheaval in Egypt since the overthrow of President Hosni Mubarak in 2011 has battered its economy, frightening away tourists and investors, and cutting into state finances.
Apicorp, a development bank established by the Organization of Arab Petroleum Exporting Countries, said in a statement it already owned a 7 per cent stake in EMethanex and would increase it to 17 per cent.
The equity acquisition is aligned with Apicorp’s strategic objective of deepening its support for midstream and downstream sectors in the region’s hydrocarbon industry.
Apicorp has been a stakeholder in EMethanex since its inception in 2005. It has also been a senior lead arranger for the financing arranged in 2006 for the construction of EMethanex.
Commenting on the move, Ahmad Bin Hamad Al Nuaimi, the chief executive and GM said, "We are pleased to expand our direct equity participation in EMethanex, a company that has over the last decade developed into an important methanol production hub. One of the key focuses of our ongoing diversification programme is to support companies that are helping expand the Arab world’s downstream production capabilities."
The companies expect the sale to be finalised by the end of this year. Methanex will continue to remain the operator and majority shareholder of EMethanex with just over 50 per cent ownership. The remaining 33 per cent is held by the Egyptian government.
EMethanex operates a facility in northern Egypt with a capacity to produce 1.3 million tonnes of methanol a year.
Methanol, a liquid petrochemical produced mainly from natural gas and coal, is used in windscreen washer fluid, recyclable plastic bottles, plywood floors and synthetic fibers.
Al Nuaimi pointed out that such capabilities were critical for Arab economies to maximise economic gains from their vast hydrocarbon sources.
"EMethanex’s impressive production capabilities give it considerable value-creation potential," he added.
The company’s production facility in Damietta is an important job-creator for the local economy. It created 3,500 jobs during the construction phase and currently employs over 450 full-time Egyptian employees and contractors.
The Damietta plant is considered one of the most energy efficient methanol plants in the world. With a production capacity of 1.3 million tonnes of methanol per year, it supplies both local and global methanol markets.
"We believe Egypt’s hydrocarbon industry possesses significant long-term growth potential and we are continuing to seek promising investment and financing opportunities in Egypt that are aligned with our strategic diversification priorities," said Al Nuaimi.
"As part of our mandate of developing the Arab energy sector, we seek to support companieslike EMethanex that can deliver tangible economic value to member countries such as Egypt," he added.
Apicorp bought a 5.62 per cent equity stake in Saudi-based Industrialization and Energy Services Co (Taqa) from Arabian Pipes Co (APC) earlier this month. - Reuters and TradeArabia News Service