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Motiva puts on hold construction of new cracker and petrochemical plants in Port Arthur

August 12/2021

MOSCOW (MRC) -- Saudi Aramco's Motiva Enterprises subsidiary has withdrawn documents seeking tax breaks for a new ethane-fed cracker and downstream derivative units adjacent to its refinery in Port Arthur, Texas, indicating the projects have been put on hold, reported S&P Global with reference to sources familiar with company operations.

The latest inactive agreement and project list published in mid-June by the Texas Comptroller's Office showed Motiva had withdrawn applications for tax breaks from school districts for a USD4.7 billion steam cracker to make ethylene, a USD1.7 billion aromatics unit that would manufacture benzene and paraxylene, and a USD2.72 billion project to build multiple polyethylene (PE) units.

The original applications for tax breaks from school districts submitted in November 2018 for the cracker and aromatics unit said that if the company approved the projects, cracker construction would begin in Q1 2020 with completion in Q4 2024, and construction on the aromatics unit would begin in Q2 2020, followed by completion in Q4 2022. A later update on the aromatics unit said that if approved, construction on the aromatics unit would begin in Q4 2020 and wrap up in Q4 2024.

Documents submitted in August 2019 seeking tax breaks for the PE units also said that if the company approved, construction would start in Q4 2020 and wrap up in Q4 2024.

Construction has not begun on any of the projects.

Motiva did not comment on the withdrawals of documents seeking tax breaks, saying only that the company does not comment on "market rumors or speculation." Saudi Aramco declined comment.

However, sources familiar with company operations said Motiva put the cracker project on hold in 2019 and reassigned staff dedicated to its planning to other projects after the company bought Flint Hills Resources' 634,000 mt/year mixed-feed cracker in Port Arthur.

The downstream PE units and aromatics facility remained as possibilities, but became less important as oil prices plunged amid the height of COVID-19 shutdowns in 2020, market sources said.

"They could have made this announcement a year ago," a source said.

In addition, Saudi Aramco in 2020 finalized its USD69 billion acquisition of a 70% stake in global petrochemical producer Saudi Basic Industries Corporation, or SABIC. That move substantially increased Saudi Aramco's petrochemical footprint, sources noted.

In April 2021, SABIC said it would take over sales and marketing of about 5.4 million mt/year of Saudi Aramco's chemicals and resin products, centering SABIC's commercial focus on petrochemicals while Aramco's trading arm focuses on fuel products.

As MRC wrote previously, in early March, 2021, Motiva Chemicals was resuming operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and was expected to finish in the first week of March 2021. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
Author:Margaret Volkova
Tags:PE, benzene, crude and gaz condensate, paraxylene (PX), propylene, ethylene, petrochemistry, Motiva Enterprises, Sabic, Saudi Aramco, Saudi Arabia, USA.
Category:General News
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