With JV, Sabic makes bold move for North American petchem markets

Leave it to ExxonMobil Chemical and Sabic to do it big.

The global petrochemical heavyweights made headlines recently in announcing they are considering a joint venture for a multibillion-dollar petrochemical complex in the US Gulf Coast region.

How big are we talking? The project would be anchored by a 1.8 million mt/year ethylene-capacity steam cracker — which would make it the largest such plant in the world — and also include polyethylene and monoethylene glycol production.

Potential locations include South Texas, near Corpus Christi, as well as Louisiana, near Plaquemine. This is key as both areas are home to refining and petrochemical clusters.

Corpus Christi has easy access to abundant feedstock from the Eagle Ford shale play as an added bonus, given the project under consideration would use ethane to feed the cracker.

For those keeping track of the shale-fueled petrochemical boom in North America, Sabic’s proposed incursion should come as no surprise.

The Saudi Arabia-based company has been trying to expand its footprint in North American olefins and polymers markets for some time. For the past 3-5 years, market participants deemed Sabic, already one of the world’s largest petrochemical and plastic resins producers, as a prime candidate to partner on a major petrochemical project in the US.

In the US, Sabic, which is 70% controlled by the Saudi government, first made a splash in 2007 with the acquisition of GE Plastics for $11.6 billion. The company renamed it Sabic Innovative Plastics before dissolving it in 2015 in a reorganization.

The company also operates a styrene plant in Carville, Louisiana as part of a joint venture with Total Petrochemicals and has an 11.5% stake in an olefins complex operated by Williams in Geismar, Louisiana.

A JV with ExxonMobil Chemical, another major player in the polymer resins space, would allow Sabic to penetrate North American polyethylene markets as a producer, one able to cash in on the region’s feedstock advantage.

Sabic is not the only Saudi company eyeing the region for expansion.

Aramco, the energy conglomerate owned by the Saudi government, recently lost a bid to claim the Shell Norco refining and chemical assets in St. James Parish, Louisiana as part of the Motiva split. Aramco and Shell formed Motiva in 1998 and spent $10 billion on an expansion of their Port Arthur, Texas plant making it the country’s largest. The split, which took place earlier this year, leaves Aramco with the Motiva name and ownership of the 600,000 b/day refinery in Port Arthur, Texas as well as distribution terminals. Shell, meanwhile, retains the Louisiana assets.

According to Reuters, Aramco’s failure to acquire the petrochemical asset in Norco was a setback the company’s objective to expand its footprint in key markets.

If history is any indication, an ExxonMobil-Sabic partnership stands a good chance of flourishing.

ExxonMobil and Sabic have worked together for 35 years in major chemical joint ventures in Saudi Arabia. Their first joint venture was established in 1980 to produce several poly-olefins including ethylene and propylene and became Saudi Arabia’s first polyethylene producer. Additionally, they partnered together in 1985 to establish Yanpet – one of the largest petrochemical complexes in that country.

The proposed JV would also bolster credence to a second wave of shale-driven petrochemical projects in North America expected to occur in the 2020-2023 timeframe, with Shell, Total and Thailand’s PTT also scheduled to have world-scale capacities start up by then.

The first wave, underway and expected to last through 2018-2019, includes world-scale projects by ExxonMobil Chemical, Chevron Phillips Chemical, Dow Chemical and Formosa Plastics Corporation USA.

Source: http://blogs.platts.com/

Discount Heating Oil Prices is a company where one can find the lowest home heating oil prices. The company also provides delivery assistance to your home punctually and securely. Just visit the official website, enter your zip code, browse the lowest price available on heating oil in your place and click on the “buy now” button. Getting discount heating oil in Massachusetts is now just a click away from you

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s