Engineering News

Chevron poised to benefit from Mideast, US steamcracking assets
12Mar2013/633 pm EDT/2233 GMT

With 100% of its ethylene cracking capacity located in the Middle East and North America, US oil and petrochemical major Chevron is poised to benefit financially and competitively from its access to cheap feedstock, the company said Tuesday.

"Our ethylene cracking portfolio is entirely positioned in these two attractive regions (where ethane gas prices are much cheaper than naphtha in Asia). This foundation and strong operating performance is formula from strong financial result (in petrochemicals)," Mike Wirth, executive vice president of Chevron's Downstream and Chemicals unit, said in an analyst call.

Chevron and Phillips 66 each hold a 50% stake in Chevron Phillips Chemical Co. and its affiliates. Chevron also operates Chevron Oronite, a global fuel and lubricants additive business.

CPChem, currently the world's largest producer of high density polyethylene, operates several steamcrackers in Qatar and Saudi Arabia through joint ventures, as well as wholly owned assets in the US. It has total ethylene capacity of about 7.8 million metric tons (17.19 billion lb) a year, with US assets totaling around 3.5 million mt/year, and Qatar and Saudi assets around 4.3 million mt/year.

Chevron anticipates that demand for its petrochemical products would grow 43% between 2010 to 2020, Wirth said, adding that Asia will continue to the the primary growth engine, while growth in the company's lubricants and petchems unit will be "faster than fuels."

"We've sold underperforming or non-strategic assets, simplified our operations and reduced costs... . We will maintain a focused and competitive portfolio, and selectively pursue growth in petrochemicals and lubricants," Wirth said.

Pertaining to the company's plan to build a new 1.5 million mt/year ethylene plant and two new 500,000 mt/year polyethylene facilities in the US Gulf Coast by 2017, Wirth said the company is expected to reach a "final investment decision this year." Meanwhile, At Cedar Bayou, Texas, CPChem's 250,000 mt/year hexene plant is on track to start up in 2014.

Source: Platts McGraw Hill Financial

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