Thursday, Dec 15, 2011
(This story was originally published Wednesday)
--Chevron Phillips Chemical to invest $500 million in new Saudi facility
--Saudi Polymers Co. to start commercial operations in 1Q
--Says no debt market activity planned
By Tahani Karrar-Lewsley
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Chevron Phillips Chemical Co. plans to invest some $500 million into a nylon and converted-products operation in Saudi Arabia and expects its Saudi Polymers Co. facility to start commercial production in the first quarter of 2012, the company's top executive said.
Chevron Phillips Chemical President and Chief Executive Officer Peter Cella told Zawya Dow Jones in an interview Wednesday that the planned nylon and converted-products operation will include a 50,000-ton-a-year nylon plant, a 20,000-ton-a-year compounding unit and a 120,000-ton-a-year conversion facility that "will be able to make all sorts of downstream products."
Cella said the project, whose total cost is seen exceeding $500 million, will be carried out by a 50:50 joint venture between Saudi Industrial Investment Group, or SIIG, and Arabian Chevron Phillips Co., or ACP, a fully-owned subsidiary of Chevron Phillips Chemical Co.
Commercial start up is nearing at Chevron Phillips Chemical's Saudi Polymers Co., a joint venture between ACP and the local National Petrochemical Co., Cella said. The company just completed mechanical construction and commissioning is under way at the facility, which includes a 1.2-million-tons-a-year ethane cracker.
"We expect commercial production in the first quarter of next year," he said.
Cella said Chevron Phillips Chemical would always look for the best priced feedstocks.
Riyadh-based NCB Capital said Wednesday it expected the price of natural gas paid by petrochemical companies in Saudi Arabia to increase to $1.5 per million British thermal units, or BTU, from $0.75 per million BTU now , as of the beginning of 2012.
"Competitive feedstocks are crucial to our success and that's what we seek around the world and in our investment pattern," he said. "We seek competitive feedstocks no matter where they are in the world."
Cella said his company had no need to tap debt markets at present. "There's no plans to get into the debt markets, we are generating sufficient cash flows from our own operations to fund all of our capital program going forward and we have very healthy owners who can fund us if we need it."
He added that the outlook for the petrochemical industry was positive after a difficult year in 2010 and earlier this year.
"If you look at the ethylene capacity utilization, which tends to be the bellwether for all the petrochemicals, we are actually moving out of the trough. We hit a trough in 2010 till early this year and we look at next year to continue to ramp up capacity utilization," Cella said.
-By Tahani Karrar-Lewsley, Dow Jones Newswires; +9714 446-1692; Tahani.Karrar@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
15-12-11 0337GMT
