Quoting industry sources, the Arabic-language Al-Hayat said the proposed 320,000-tonnes-a-year plant was expected to begin commercial exports in 2003.

"This will raise Ibn Zahr's total output of polypropylene to 900,000 tonnes annually," the London-based paper said. It did not give the cost of the project.

Saudi Arabia's industrial giant Saudi Basic Industries Corp (SABIC) holds 70 per cent of Ibn Zahr. Finland's Neste Oy, Italy's Ecofuel and the Arab Petroleum Investment Corp each own 10 per cent. Sabic signed a letter of intent with Parson International in April to build a second polypropylene plant in Jubail with a production capacity of 320,000 tonnes a year.