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CPChem defers decision on USGC II Petrochemical Project

July 09/2020

MOSCOW (MRC) -- Chevron Phillips Chemical (CPChem; The Woodlands, Texas) says it will take longer than originally planned to make a final investment decision (FID) on the USGC II Petrochemicals Project, an $8-billion joint venture with Qatar Petroleum (QP; Doha, Qatar), said Chemweek.

The company cites uncertainty created by the COVID-19 pandemic. Front-end engineering and design (FEED) of the project continues. "As with other capital-intensive activities, we are closely monitoring economic developments and moderating timing to preserve optionality on this project, says a statement from CPChem. In light of uncertainty created in the wake of the COVID-19 pandemic, our company intends to defer a final investment decision while it revisits market conditions and project fundamentals." The company says it has not set a new date for FID.

Orange, Texas, where CPChem already has two high-density polyethylene (HDPE) plants, remains the preferred location for the project, says the company. According to a local newspaper, the Beaumont Enterprise, Orange County authorities have approved a 10-year, 100% tax break for the project that must enter effect no later than 1 January 2024.

CPChem and QP announced the USGC II Petrochemicals Project in July 2019. At the time, they expected FID by 2021 and completion in 2024.

CPChem would hold a 51% share, provide project management and oversight, and be responsible for the operation and management of the facility. Centered on a 2 million metric tons/year (MMt/y) ethylene plant, the project would also include two downstream 1 MMt/y HDPE plants.

As MRC informed earlier, Chevron-led consortium that operates Kazakhstan's largest oil field, Tengiz, is imposing production cuts in line with government legislation covering May-June and is not yet aware of additional restrictions for July. In production since 1993, Tengiz is the mainstay of Kazakhstan's crude production and the CPC export blend loaded on the Black Sea coast. It accounts for 40% of Kazakh oil production, with output of 667,000 b/d in the first quarter. A major coronavirus outbreak at the site by the Caspian Sea has disrupted a USD46.5-billion expansion project expected to lift output to 900,000 b/d in 2023.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim.
Author:Anna Larionova
Tags:PE, Chevron, Chevron Phillips.
Category:General News
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