Sector News

LyondellBasell sees China JV with Bora as platform for further projects – CEO

September 10, 2019
Chemical Value Chain

LyondellBasell views its planned cracker and derivatives joint venture with China’s Liaoning Bora Enterprise Group (Bora) as a platform for multiple future projects in Northern China, its CEO said on Monday.

“We view this as a platform for the future versus ‘one project and done’. There’s the potential for multiple phases in the next 10 years or more as we build out a presence in Northern China,” said Bob Patel, CEO of LyondellBasell, in an interview with ICIS.

On 5 September, LyondellBasell announced the signing of a non-binding memorandum of understanding (MoU) with Bora to form a 50/50 JV in Panjin, China to operate a 1.1m tonne/year cracker to produce olefins and polyolefins.

Patel said the project will include polyethylene (PE) and polypropylene (PP) and “the typical co-products that come off of crackers”, but would not comment on capacities or whether styrene capacity would be included, which had been reported in an earlier Reuters story.

“Most strategic is PE and PP, which leverages our marketing network and technology. This will be produced in China for the local China market,” said Patel.

“China will be a growing market for PE and PP. The question is: How do we serve that market? By building assets in the US and exporting to China, or building locally?” he added.

Bora initially approached LyondellBasell to license its PE and PP technology for units downstream from its planned cracker.

“As talks progressed, there was the potential for us to invest in the project itself,” said Patel.

The JV project will employ LyondellBasell’s Hostalen ACP PE technology and both Spheripol and Spherizone PP technologies.

Further into the future, within a 10-year horizon, there is also the potential for a propylene oxide (PO) project, noted the CEO.

The cracker and derivative projects in Panjin are more than 50% complete, essentially “de-risking” the investment from LyondellBasell by bringing the timing of potential cash flows closer.

“Typically [for a new cracker project] it is 4-5 years away. In this case, it would presumably be in less than 2 years,” said Patel.

While the CEO would not provide a timeframe for project completion, he said the companies are working on reaching a definitive agreement by the first half of 2020. In the 5 September press release, LyondellBasell noted Bora began construction on the project in 2019.

For LyondellBasell, it was critical to have a partner with a solid track record in construction and operations, as well as knowledge of the local market, said the CEO.

“Bora is a very credible, established entity and brings the ability to execute large projects. It has a 300,000 bbl/day refinery on the site it has been operating for seven years with a strong safety record,” said Patel.

The first phase of the JV project, which involves the cracker and derivatives, would be both debt and equity financed, he noted.

Figures were not provided for total project cost or LyondellBasell’s portion of the capital.

In the US, Patel said it is unlikely the company would build a new cracker “in the foreseeable future”, given its focus on shareholder returns.

“For the Bora JV, lower capex (capital expenditures) and the ability to serve the local market gives us the return we need. In the US, we don’t see a new cracker,” said Patel.


However, the company will carefully consider PE and PP expansions in the US, along with a potential debottleneck of its Channelview, Texas cracker, he said.

The Channelview cracker debottleneck totaling around 550m lb (250,000 tonnes)/year would take place in equal amounts in two phases in the 2022-2025 period, he noted.

On the propylene and PP side in the US, a propane dehydrogenation (PDH) project is unlikely, said the CEO.

“We are not in a rush to do either given where the macro situation is and how we see supply,” said Patel.

In the US, LyondellBasell is focused on completing its 500,000 tonne/year Hyperzone high density PE (HDPE) project in La Porte, Texas in Q4 2019, and its propylene oxide/tertiary butyl alcohol (PO/TBA) project in Channelview and Bayport, Texas by the second half of 2021, he said.

In viewing the outlook for PE, which has seen falling price trends worldwide, it is “truly important to examine closely the types of PE”, said Patel, noting that HDPE, which comprises 80% of LyondellBasell’s PE business, is only seeing two near-term capacity expansions in the US – from LyondellBasell, and Formosa Plastics.

“The impact of [new PE] capacity should be fairly known in two to three quarters. Our sense is that inventories downstream are relatively low because of macroeconomic concerns and expectations of more supply,” said Patel.

“If demand were to improve more than expected, it would absorb the new supply. We view the situation as transitory – not structural,” he added.

By Joseph Chang

Source: ICIS News

comments closed

Related News

September 26, 2021

INSIGHT: End of China property bubble threatens global petrochemicals demand

Chemical Value Chain

When things are rushed, there’s a higher chance they can go wrong. We ended up with factories being built almost solely for the economic multiplier effect from construction activity without sufficient regard for raw-material supply and how to sell the output. We saw this in purified terephthalic acid.

September 26, 2021

INEOS Grangemouth moves forward on the next phase of its journey to reduce greenhouse gas emissions to net zero by 2045, with further investment in excess of £1 billion.

Chemical Value Chain

INEOS has already committed over £500m spend on projects which are approved and currently being implemented at Grangemouth. This includes investment in our New Energy Plant, which is due for completion in late 2023 and will supply energy to all our site operations and the highly efficient technology will drive down emissions by at least 150,000 tonnes of CO2 per annum.

September 26, 2021

Trinseo & Indaver announce offtake agreement for recycled styrene

Chemical Value Chain

As with its other waste collection processes, Indaver will collect post-consumer polystyrene (PS), such as yogurt pots and single-use packaging, and recycle and produce the r-styrene through a proprietary depolymerization technology at its Antwerp, Belgium site.

Send this to a friend