Air Products announced Sunday that it has signed an agreement to form a $1.3-billion joint venture (JV) with Lu’An Clean Energy Co., to own and operate a coal-to-syngas project in China’s Shanxi Province.
Air Products will contribute four large air separation units (ASUs) previously constructed to supply the project as well as $500 million cash for 60% ownership in the joint venture. Lu’an will contribute gasification and syngas purification equipment and receive $500 million for a 40% stake in the venture.
Air Products has already invested $300 million to build the four ASUs to supply the Changzhi City site. The venture “is perfectly in line with our stated strategy of deploying our significant cash to grow by acquiring existing assets and expanding our scope of supply to include syngas,” says Seifi Ghasemi, chairman and CEO of Air Products.
The venture will receive coal, steam and power from Lu’An and will supply syngas to Lu’An Mining under a 20-year onsite contract. Closing is expected as soon as possible, pending government and regulatory approvals, Air Products says. The four ASUs will produce 10,000 metric tons/day of oxygen and 6,000 metric tons/day of nitrogen. Lu’An Mining will produce around 1.8 million metric tons/year of oil and chemicals using the Fischer Tropsch advanced gas-to-liquids technology.
“Extending our strong partnership/relationship with Air Products through this new joint venture enables us to take advantage of world-leading project management and operational expertise to deliver syngas for this landmark energy project,” says Li Jinping, chairman of Lu’An.
On an investor call 11 September, Air Products maintained earlier earnings guidance from continuing operations of $1.65-$1.70/share for the quarter ending 30 September, up about 12% year-on-year at the midpoint, despite the impact of Hurricane Harvey. Air Products did not suffer any catastrophic damage as a result of the storm but outages at refining customers and higher costs were likely to reduce results, Ghasemi says. He adds, however, that strong performance in Asia will help offset negative storm impacts and allow the company to meet previous estimates.
By Natasha Alperowicz
Source: Chemical Week
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