Why Share of Air Products [NYSE: ADP] is Surging Today?

Shares of Air Products and Chemicals, Inc. [NYSE: ADP] has skyrocketed 2% at the time of writing on Monday after Aramco, Air Products, ACWA Power and Air Products Qudra inked a definitive agreement for the asset buying and project financing of the $12 billion air separation unit (ASU)/gasification/power joint venture (JV) in Jazan Economic City.

It has been disclosed that after the execution of these conclusive agreements, all parties under the joint venture anticipate asset transfer and financing to happen during the month of October 2021. Air Products is planning to carry out a public investor call at that time. Aramco disclosed that this JV is intended to be fundamental to the self-sufficiency of its megaprojects at Jazan.

Shares Details of the Firm in Joint Venture

In connection with the agreement, Aramco via its unit Saudi Aramco Power Company (SAPCO) holds a 20 percent share in the JV, Air Products will hold 46 percent, ACWA Power will hold 25 percent and Air Products Qudra will own 9 percent. Likewise, Air Products’ total ownership position is 50.6 percent by holding an additional 4.6 percent through Air Products Qudra.

The JV is acquiring the ASUs, gasification, syngas cleanup, utilities, and power assets from Aramco. The JV holds and runs the facility under a 25-year pact for a fixed monthly fee. Aramco will deliver feedstock to the JV, and the JV will generate power, steam, hydrogen, and other utilities for Aramco. The JV serves Aramco’s Jazan Refinery, a megaproject to process 400,000 barrels per day of crude oil to manufacture the main products such as ultra-light sulphur diesel, gasoline, and other products.