Sagia nod Jubail Chevron Phillips, a $1 billion petrochemical project between US firm Chevron Phillips Chemical Company and the Saudi Industrial Investment Group (SIIG), has received clearance from the Saudi government.

The announcement that it had been cleared by the Saudi Arabian General Investment Authority (Sagia) came from the Authority's governor Prince Abdullah bin Faisal Al Saud. The project is the second joint venture between Chevron Phillips Chemical and SIIG.

The capital of the new company, shared equally by the two partners, will be raised through equity investment of $320 million and a low-interest loan from the Saudi Industrial Development Fund, Prince Abdullah said.

Start-up is expected in 2006. New products will include benzene, ethylbenzene, styrene and propylene. The participants expect a majority of the facility's styrene to be exported from the Arab Gulf region. Other products and co-products will be marketed locally.

"Our strategy has been to build world-scale facilities with access to advantaged feedstocks and large, growing markets," said Mike Parker, CPChem's senior vice president, Aromatics and Styrenics.

"This project clearly meets those objectives," said Suliman Mandeel, managing director of the Riyadh-based SIIG. "This project also will provide important, high-technology jobs for Saudi citizens."

The existing Saudi Chevron Phillips facility, which started up in 2000, currently produces benzene, utilising Chevron Philip's proprietary Aromax technology, cyclohexane and motor gasoline. Chevron Philips and the Saudi firm recently announced a 60,000 tonnes per year (200 million gallons per year) expansion of the cyclohexane unit.

Chevron Philips is one of the world's top producers of olefins and polyolefins and is a leading supplier of aromatics, alpha olefins, styrenics and specialty chemicals. The company has assets of almost $6 billion and is owned equally by ChevronTexaco Corporation and Phillips Petroleum Company.

Saudi Industrial Investment Group is a consortium of leading Saudi businessmen and several Saudi public joint stock companies focused on industrial investment in the petrochemical industry in Saudi Arabia. The chairman of the group is Shaikh Abdulaziz Alquraishi. The group was originally founded by the late Shaikh Ahmad Juffali in 1985 as the Saudi Venture Capital Group (SVCG).