Sipchem's affiliate International Polymers Company (IPC) is 75-percent owned by Sipchem while South Korea's Hanwha Chemical owns the rest.

GS will build the 200,000 tons per year (tpy) plant which would produce both ethylene vinyl acetate (EVA) and low density polyethylene in Jubail, on Saudi Arabia's Gulf coast.

The plant is expected to be operational in the second quarter of 2013, Sipchem said in a bourse statement.

Sipchem did not give a value for the engineering, procurement and construction (EPC) contract but said the project would cost around 3 billion riyals ($800 million).

Previously, Sipchem had said on its website that the third expansion phase would result in a production of 300,000 tpy of EVA and other products and would cost SR4 billion.

The company has secured ethane which will be cracked into ethylene by an affiliate of Saudi Basic Industries Corp. (SABIC). Another Sipchem affiliate would also provide vinyl acetate monomer as feedstock, Sipchem said.

Sipchem has a technology licensing agreement with ExxonMobil for the project.

Saudi Arabia is investing in a massive expansion plan in petrochemicals and chemicals as it looks to profit more from processing energy resources and become less dependent on crude revenues alone.