Innovene and Delta Oil to explore petrochemical investment in Saudi Arabia
Innovene, BP’s petrochemicals and refining subsidiary, and Delta International, a leading Saudi-owned independent development company, announced the signing of a Memorandum of Understanding (MOU) for a major investment in Saudi Arabia’s petrochemical sector. The memorandum marks the beginning of negotiations between Innovene and Delta for the construction of a world-scale cracker and associated derivative capacity in the Kingdom, with sites being explored in Jubail. It is intended that this project, which is expected to cost around $2billionn, will form a platform for future long-term growth opportunities.
Innovene and Delta will be equal partners within the joint venture. It is anticipated that subject to final approvals, an agreement will be signed before the end of the year, with the commissioning of the first plants expected in late 2008.
Comments: The role of the Middle East continues to strengthen in the olefins/polyolefins industry. In recent years, many companies have started to leverage the advantaged feedstock position of the region by establishing state-of-the-art cracker and derivatives complexes. Other reasons for expansions in the Middle East include (1) strong political support to build a competitive export-based industry, (2) upstream integration and desire to take advantage of oil industry competence, (3) low-cost natural gas feedstock, (4) available cash flow to fund the projects, (5) no technology barriers to entry, (6) penetration of global chemical markets, and (7) access to international technology as well as technical co-operation. The primary driving force for investing in this region continues to be best-in-class manufacturing cost economics, with most of the products designated for export markets, mainly Asia-Pacific.
The long-term goal for the Innovene/Delta Oil joint venture is to construct two world-scale crackers in the Kingdom on a phased basis. Currently, Innovene’s major manufacturing sites include Grangemouth in Scotland; Lavéra in France; Köln in Germany; Lima, Chocolate Bayou, and Green Lake in the US; and SECCO, the joint venture between Innovene/BP, Sinopec, and SPC in Shanghai. The addition of a facility in the Middle East should increase Innovene’s market attractiveness as it seeks an IPO later this year.
Siam Cement & Itochu Corp. to Invest in Iran
Japanese trading company Itochu Corp. announced that it will launch a partnership with two Thai firms in a bid to begin producing polyethylene in Iran in 2008 in a deal that would make it the first Japanese company to invest in Iran since 1989.
Itochu will sign corporate alliance pacts with the Siam Cement Public Co. group and Thailand’s state-run PTT Public Co. group for the 25 billion yen investment.
Itochu would be the first Japanese firm to invest in Iran since trading house, Mitsui & Co. and others pulled out of a petrochemical venture with Iran in 1989. The alliance between Itochu and the Thai firms will take a 60 percent stake in the investment firm, it said. The Iranian entity will hold the remainder.
Comments: Itochu Corp. is one of the leading trading companies participating in several markets such as textile, machinery, chemicals, and several others. The company has been recently forming several alliances with other international firms in several divisions. Siam Cement is mainly comprised of 5 business units including (1) paper, (2) petrochemicals, (3) cement, (4) building products, and (5) distribution.
Siam Cement participates in petrochemicals through its subsidiary, Cementhai Chemicals Co., Ltd. In 1989 the Siam Cement Group entered into the downstream petrochemicals business with the establishment of Thai Polyethylene Co. producing high-density polyethylene resins. Later, CCC Chemical Commerce Co., Ltd., was also formed to act as the marketing arm for polyolefin resins.
The company has entered into joint ventures with the world’s leading petrochemicals firms, including the Dow Chemical Company, to produce linear low-density polyethylene (LLDPE), polystyrene, styrene monomer, synthetic latex, and polyolefin. Other joint ventures are with Mitsui Chemicals, Inc of Japan, to produce PTA and PP Compound, and also with Mitsubishi Rayon Co., Ltd., of Japan to produce MMA.
These leading Asian firms are also investing in the Middle East to capitalize on the feedstock advantage and remain at par with other companies.
Iranian firm to invest in methanol to propylene plant and a PP unit
Industrial Development and Renovation Organization of Iran (Idro) announced its plans to construct a methanol-to-propylene (MTP) plant and a polypropylene (PP) unit in Gazvin, Iran, for start-up in 2008.
The project would produce 1.6 million MT/year of methanol and 500,000 MT/year of PP. Idro had formed a 40:60 joint venture, to be named Petro Caspian, with a private company for the project.
Comments: Idro (Industrial Development and Renovation Organization of Iran) was founded in 1967 to develop the industrial sector of the Iranian economy. Generally speaking, Idro carries a minority interest in its projects and intends to privatize the petrochemical industrial sector of Iran by attracting foreign capital. The newly announced MTP (methanol-to-propylene) plant and polypropylene by Idro may be the second such unit in Iran only the new announcement is five times bigger than the former Lurgi-sponsored MTP plant slated to produce 100,000 MT/yr of polypropylene and start-up in 2009. The location of the Petro Caspian project is not yet fixed but Lurgi’s project is located in the Bandar Iman Special Economic Petrochemical Zone. The Lurgi plant represents the first industrial scale-up of MTP based on the pilot plant process proven by Statoil in Norway. Probably, the Petro Caspian MTP project will also use Lurgi technology although no announcements have been made by the company in this nature.
Westlake considers investment in the Middle East
Westlake Chemical plans to invest in a petrochemicals complex planned by Project, Management & Development Co. (PMD) in Saudi Arabia.
PMD plans to produce 1.35 million MT/year of ethylene, 700 thousand metric tons per year of propylene, 100 KT/year of benzene, and 50 KT/year of butane-1. The project will also construct downstream units having capacities of 950 KT/year polyethylene, 600 KT/year polypropylene, ethylene oxide, and ethylene glycol. The company also plans to buy bisphenol A, phenol, and cumene units.
Comments: Westlake Chemical of Houston is already an international petrochemical player through their ownership parentage so why shouldn’t they be in the Middle East?
Westlake engages in the manufacture and marketing of petrochemicals, vinyl, polymers, and fabricated products in North America. The company operates through two segments, Olefins and Vinyls. They have been a star performer on Wall Street by going public in an IPO late last summer and more than doubling their stock price to the present. The Chao Group – has various investments, owns Titan Plastics in Malaysia, and has a substantial share of Westlake. One of Westlake’s well-executed strategies has been to be vertically integrated into a good cost position up and down its entire supply chain. Their olefins and vinyl investments here in the US show this strategy at work.
After a very successful IPO, and several recent acquisitions in the US, what could be their encore? The encore is a partnership in a large Saudi cracker and derivatives project of course. The project started by Project Management & Development (PMD) in Al Jubail is a large, well-structured olefins and aromatics project with a full derivative slate. PMD is significantly advanced and integrated to offer a ready-made mega-type acquisition for equity partners like Westlake. The project is integrated with a feedstock allocation from Aramco which virtually guarantees a profitable operation. The project had been experiencing problems getting its financing together but now with Westlake on board, things look different due to their “golden” touch. Westlake was #30 on the US list of chemical companies in 2004 with about $2B in total sales. Depending on the share of the project they take with PMD, there could be significant growth in store for the company. The PMD project also broadens Westlake’s product portfolio into PP, EO, EG, bisphenol A, phenol, methylamines, ethanolamines, and ethoxylates. Westlake also brings needed and critical business/marketing expertise in commodity petrochemicals which is another factor why the whole PMD project can probably now be financed – they have a complete team.
Firestone to add third TPO line for roofing membranes
Firestone Building Products Company is increasing TPO production with the construction of a third manufacturing line at its thermoplastic polyolefin (TPO) plant in Wellford, SC. When completed in the first quarter of 2006, the new line will approximately double the company’s current TPO roofing membrane capacity.
The 80,000-square-foot Wellford plant produces Firestone UltraPly™ TPO roofing membranes and accessories. With the addition of the new line, the plant will operate three TPO membrane and accessory manufacturing lines. According to industry reports, as well as Firestone’s data, TPO products continue to capture significant market share, as demand grows for heat-reflective, energy-efficient roofing systems. TPO delivers outstanding field performance with exceptional resistance to ultraviolet, ozone, and chemical exposure.
The expansion will be Firestone’s second investment in the Wellford, S.C. facility. In 2003, approximately 60,000 square feet were added to the site to better accommodate the demand for Firestone UltraPly® TPO products.
Comments: TPOs have been growing by substitution of flexible PVC in the roofing market. TPOs membranes are cheaper and easier to apply compared to flexible PVC membranes. Some of the other major suppliers of roofing membranes include companies such as Carlisle Syntec, Johns Manville, and Stevens Roofing. Single Ply roofing is gaining market share at the expense of built-up roofing and within single-ply markets TPOs are growing the fastest. Firestone also participates in the SB copolymers-based asphalt-modified roofing market.
Firestone operates 13 manufacturing facilities in North America, including two EPDM plants, two Asphalt-based plants, one thermoplastic plant, and eight insulation plants. Firestone Building Products is a leading manufacturer of single-ply EPDM and thermoplastic roofing systems, asphalt-based roofing systems, poly iso insulation, and accessories for the commercial roofing industry.
Ineos to invest in vinyl through its subsidiary EVC
Ineos announced its plans to invest, via its affiliate EVC, to invest about $1.25 billion in ethylene, chloralkali, and PVC plants at its site in Wilhelmshaven, Germany.
An agreement to begin a $25 M preliminary study of the investment was reached in 2004. The project would include an ethane cracker, a chlorine electrolysis plant, and an expansion of EVC’s present VCM and PVC facilities at the site on Germany’s North Sea coast. EVC would also construct a 170-mile ethylene pipeline from Wilhelmshaven to Marl.
Comments: EVC International is one of the leading producers of PVC in Europe. The company has PVC plants located in several locations based on suspension & emulsion processes including (1) Schkopau, Germany (315 KT, suspension/emulsion process), (2) Wilhelmshaven, Germany (320 KT, suspension/emulsion process), (3) Porto Marghera, Italy(180 KT, suspension), (4) Porto Torres, Italy (90 KT, suspension), (5) Ravenna, Italy (200 KT, suspension), (6) Barry, UK (125 KT, suspension), (7) Fleetwood, UK (45 suspensions), and (8) Runcorn, UK (115 KT, suspension). It has some presence in the US and India (51% owner of Caprihans India Limited).
Last year, Ineos purchased 100% of EVC making it a wholly-owned subsidiary. Ineos has recently invested in the polymers business. It recently purchased BASF’s polystyrene business. The company was also bidding to acquire Basell. Additional investment in ethylene and chloralkali should give the company a better feedstock position and help boost its overall vinyl segment.
SABIC to create YANSAB and float 35% of the company
Saudi Basic Industries Corporation (SABIC) has announced that it is in the process of establishing a Joint-Stock Company named: The National Petrochemicals Company (YANSAB) with a fully paid-up capital of SR 5.625 billion, at Yanbu Industrial City. The company is the newest SABIC affiliate and is planning to produce 4 million MTY of ethylene, propylene, polyethylene, ethylene glycol, and other petrochemical products.
SABIC has allowed its partners in the affiliates IBN RUSHED and TAIF to hold 10% of YANSAB shares.
SABIC also plans to obtain the necessary approvals as required by law to float 35% of capital for public subscription. SABIC will hold 55% of the paid-up capital.
South Australia to ban plastic bags from January 1, 2008
South Australian State Government announced its plans to introduce regulations to ban polyethylene bags – mostly issued by supermarkets, video stores, and fruit and vegetable sellers – from January 1, 2008.
The Australia-first move aims to eradicate about 500 million “single-use” bags issued mainly by supermarkets, fruit and vegetable sellers, and video stores. Such bags have become a major problem, with vast numbers ending up as rubbish, clogging waterways and blighting the landscape.
Thicker plastic bags, which are used mainly by department and clothing stores, will be exempt – but the Government yesterday signaled they were likely to be targeted in the future. Small plastic bags, known as “barrier bags” and used to separate meat, fruit, and vegetables, are also exempt for hygiene purposes.
Comments: The concerns related to pollution could prompt other countries to impose similar restrictions. This will be especially true for countries that do not have a good recycling infrastructure. Countries like India and China that do not have an extensive recycling problem will eventually face similar problems of bags ending up as rubbish, clogging waterways, and blighting the landscape.
This ban could impact some of the consumption of polyethylene in Australia. However, since China is the major exporter of polyethylene bags the impact will be more in terms of a decrease in imports than the decrease in domestic consumption of polyethylene resins. The economic impact of the ban on the polyolefins industry in Australia might be very little.
Degussa forms a joint venture for the production of high-performance polymers
Degussa AG and the Jilin University of North China signed an agreement in Dusseldorf concerning collaboration in a joint venture. This marks the successful completion of negotiations, preceded by the conclusion of a precontract in December 2004. Degussa will hold an 80 percent share in the new joint venture, and Jilin University 20 percent.
The university is the technology provider in the joint venture and will also act as a research partner in the future. The new joint venture will benefit from the respective strengths of Degussa and Jilin University, namely financial resources and leading technology in high-temperature polymers. Pending approval by the relevant bodies and obtainment of all the necessary Chinese permits, the new business enterprise will be taking up work under the name of JIDA Degussa High-Performance Polymers Changchun Co. Ltd. (JIDA Degussa). The goal of the new joint venture is to develop and manufacture polyetheretherketone (PEEK) and polyethersulfone (PES).
JIDA Degussa will enable the Degussa High-Performance Polymers Business Unit to expand its range of products in the attractive segment of high-performance polymers, which have to fulfill exceptional mechanical, thermal, and chemical requirements. In this respect, the business unit is setting its sights on the automotive engineering and electronics end markets and the aerospace industry in particular.
Comments: Polyethersulfone (PES) is a high-temperature engineering thermoplastic classified as a specialty polymer used in several applications such as automotive fuses, membranes, electrical power devices, ESD matrix trays, non-Stick cookware, light reflectors, and others. Major producers of PES include BASF, Degussa, Solvay, and others. The major advantages of PES include (1) High-temperature performance, (2) dimensional stability, and (3) inherently flame retardant.
Polyetheretherketone (PEEK) is a thermoplastic polycondensate. Its general properties include (1) high tensile and flexural strength, (2) high impact strength, and a high fatigue limit, (3) high heat distortion temperature, (4) high chemical resistance, and high radiation resistance, (5) Good electrical properties, (6) good slip and wear characteristics, and low flammability. PEEK is supplied by several producers such as Degussa, Solvay, and others.
The High-Performance Polymers Business Unit is part of the Specialty Polymers Division, which generated sales of approx. EUR1.4 billion in 2004. The joint venture will enable Degussa to strengthen its presence in Chinese high-growth rate markets.
Engelhard acquires syngas catalyst business from Sinopec subsidiary
Engelhard Corporation announced that it has acquired the syngas catalyst business of Nanjing Chemical Industry Corporation (NCIC), a wholly owned subsidiary of SINOPEC, one of China’s largest integrated energy and chemical companies.
Engelhard acquired NCIC’s Syngas business operations, catalyst technology, and Nanjing-based manufacturing assets. NCIC, China’s leading syngas catalyst producer, has been a pioneer in the research and development of syngas catalyst technologies for China and world markets.
NCIC was founded in 1934 as one of China’s earliest chemical production facilities. NCIC specializes in the development and manufacture of chemical fertilizers, organic and inorganic chemical raw materials, catalysts, and chemical fibers. NCIC is also engaged in scientific research, design, construction, and installation of advanced chemical engineering projects throughout China.
Comments: Syngas, or synthesis gas, is typically produced from natural gas or coal and is becoming a crucial intermediate in the emerging gas economy. Syngas is used as a feedstock for high-value, chemical processes such as ammonia, hydrogen, and methanol. It also can be combined with emerging downstream technologies for gas-to-liquids (GTL) processes, methanol-to-olefins (MTO) conversion, coal-to-liquids conversion, and fuel cells.
Health problems related to Bisphenol A identified
According to a study in a recent issue of the journal Endocrinology, Bisphenol A (BPA), affects female fetuses in the womb and increases the risk of breast cancer in the affected females when they grow into their adulthood.
Previous studies indicated that small quantities of bisphenol A can leak out of the food packaging material or plastics and can be absorbed by the body.
In the current study, researchers at Tufts University in Boston, Massachusetts, gave small doses of bisphenol A to the mice in the second half term of pregnancy and for four days after giving birth. The dose used was equivalent to the amount of bisphenol A humans were exposed to, according to the study.
30 days after the mice were born, or when the female mice reached puberty, researchers examined the mice and found that exposure to bisphenol A increased the number and density of terminal end buds where breast cancers are most likely to develop. This increase made the milk-producing glands more sensitive to the estrogen hormone and increased the risk of hormone-dependent breast cancer.
Comments: No single risk factor has been identified as the main cause of breast cancer although it is generally recognized that factors such as genetics, ionizing radiation, the age of giving birth, and exposure to environmental pollutants attribute to the development of breast cancer.
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