Pan-Asia PET Resin (Guangzhou) Co, one of the top three polyethylene terephthalate bottle suppliers in China, anticipates its $3.8 billion petrochemical project in Saudi Arabia will break ground next March and the first phase of the complex will become operational in August 2020.

The project, to be located in Jazan Economic City in southwestern Saudi Arabia, includes facilities for the annual production of 2.5 million metric tons of purified terephthalic acid, 1 million tons of PET, 200,000 tons of engineering plastic, 200,000 tons of thin film, 200,000 tons of polyester fiber and 5,000 tons of heavy equipment, said Lin Wencai, vice-president of Singapore-listed Full Apex (Holdings), Pan-Asia's parent company.

The project will benefit from its proximity to raw materials－with a large para-xylene facility operating in Jazan Economic City－and to the Middle Eastern and North African markets, with Middle East alone importing 3 million tons of PTA annually, mainly from East Asia, Lin said, adding that Saudi Arabia currently has no PTA production.

It will also enjoy the advantage of much lower taxes and land and energy costs, including natural gas, diesel, gasoline and electricity, although construction and labor costs are much higher than at its operations in China, Lin said.

Lin said that the project is in line with Saudi Vision 2030, a blueprint announced by the government of Saudi Arabia last May, which aims to reduce the Saudi economy's dependence on oil and turn the kingdom into a global investment powerhouse.

In March, Pan-Asia and Saudi Arabia's Royal Commission for Jubail and Yanbu signed an agreement allocating industrial land to Jazan petrochemical plant, and fundraising support is available from the Saudi Industrial Development Fund.

Pan-Asia's project in Jazan is estimated to create around 2,500 jobs, Lin said.

In a related development, the Royal Commission for Jubail and Yanbu and Saudi Aramco agreed last year to cooperate with Yinchuan Yucheng Investment Co and Guangzhou Industrial Development Group Corp to invest in Jazan Economic City and other transport and logistics hubs in the country.

The project will be the first petrochemical project wholly owned by a foreign investor in Saudi Arabia, which would be a milestone, said Du Qunlong, Asia-Pacific regional director of performance technologies at Invista, a US-based chemicals company.

The raw materials for the project can be locally sourced and raw material transport costs reduced, he said.

Wang Ting contributed to this story.