Braskem seeks US growth; Gulf countries tap outside funds
Petrochemicals news you need to know.
Braskem to seek US growth on positive polypropylene spreads
Mexico’s Ethylene XXI petrochemical complex, a joint venture between Braskem and Idesa, has reached 99% completion and will start producing polyethylene from natural gas-based ethane in Q1 2016, Braskem announced during an earnings call on February 19.
The utilities plant is already operating, and the main raw materials and accessories are already at the site to support the cracker’s start-up, the company said.
Polyethylene production from the plant is slated for both the domestic Mexican market and for exports as Braskem is seeking cost savings with operations in the United States, Europe and South America.
Cheaper oil has lowered the cost of naphtha, Braskem's main feedstock, opening a profitable spread for its main business of turning petrochemicals into plastic resins.
The company expects resin spreads around the world to remain healthy in 2016, with a higher chance of volatility in polypropylene (PP) spreads in Asia on the back of new capacity coming on stream in China.
Polypropylene spreads will remain high in the US with oversupply of propylene and no new PP capacity expected until 2019, according to Braskem’s presentation. In the US, the company will focus in 2016 on capitalizing on positive spreads in the polypropylene market and seeking growth opportunities from competitive propylene.
Braskem projects a more challenging scenario for polyethylene starting in 2017, when more polyethylene plants fed by shale gas come on stream in the US.
GCC countries tap outside funding for project finance
Falling oil prices are forcing oil-producing countries in the Gulf Cooperation Council (GCC) to seek outside funding from capital markets, private investment and other non-government sources for their real estate, oil, gas, transport and infrastructure projects, according to a recent study by Standard & Poor’s (S&P) Ratings Services, the Oil & Gas Journal reported.
The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
With deposits in regional banks decreasing because of the low oil price, governments have turned to less traditionalsources to finance their capital projects. S&P expects public-private partnerships, which are already used for water and power installations, to spread onto projects in other sectors.
The GCC governments need $604 billion to fund projects through 2019, while planned capital spending is about $330 billion, according to S&P’s estimates.
Over the next four years, Saudi Arabia, Kuwait, the UAE and Qatar will make up 92% of the total capital spending in the region.
Of the total value of projects planned and under way in 2016 – about $140 billion – 48% is for real estate and 17% each for oil and gas infrastructure.
Total seeks partner for Texas cracker; Fluor wins contracts for BASF, Sunoco Logistics
Mexichem’s 50:50 ethylene cracker joint venture with OxyChem in Ingleside, Texas will be operational and fully ramped up in Q1 2017, Mexichem reported on February 25 in its lagtest earnings results.
The company's capital expenditures totaled $666 million in 2015, $325 million of which was invested in the ethylene cracker.
As of December 31, 2015, Mexichem’s equity investment in the ethylene cracker had reached $528 million, or 73% of the total equity investment that Mexichem signed for the JV with OxyChem.
Meanwhile, Total is seeking an investment partner for up to 50% of its proposed $2 billion, 1 mtpa ethylene plant in Port Arthur, Texas, said Philippe Sauquet, Total’s president, Refining and Chemicals, at the IHS Energy CERAWeek conference on February 23.
Sauquet said the company has prospects lined up but declined to provide details. To help finance the project, Total also plans to sell a 50% stake in its adjacent Port Arthur gasoline refinery.
A final investment decision for the new ethane cracker is expected in Q3 2016 and the project could be completed in 2019.
According to Sauquet, Total is also considering expanding its petrochemicals business in Qatar and Saudi Arabia.
On the EPC side, Fluor has won an engineering, procurement and construction management (EPCM) contract from BASF for the revamp of an alcohol and plasticizers facility in Pasadena, Texas, the company announced on February 18.
Fluor will convert the general-purpose plasticizer units at Pasadena to BASF’s first diethylhexyl terephthalate (DOTP) unit in North America and will convert another unit to provide raw material for the DOTP unit.
The company has also won a construction management contract from Sunoco Logistics for a portion of the Mariner East 2 pipeline project, which will carry natural gas liquids to the Marcus Hook Industrial Complex in Pennsylvania.
Under the contract, Fluor will manage the construction of new terminal facilities to store, chill, process and distribute propane, butane and ethane at the site.
The company also announced on February 23 it had opened a new US Gulf Coast craft training center in Pasadena, Texas that will provide tuition-free, pre-employment training to people who want to enter high-demand careers in construction.
The center offers entry-level courses in the electrical, instrumentation, millwright and pipefitting disciplines with advanced training offered in welding.