LyondellBasell keen on India’s OPaL, stands by Asian JVs

19 March 2009 06:27  [Source: ICIS news]

(adds GAIL's stake in OPAL in fourth paragraph)

By Pearl Bantillo

SINGAPORE (ICIS news)--Embattled chemical firm LyondellBasell plans to continue growing its operations in Asia via India, where it is in talks to participate in a major petrochemical project at Dahej in Gujarat state.

“India continues to be an interesting market that a global player like LyondellBasell would like to serve also from a local manufacturing base,” said LyondellBasell spokesperson Waldemar Oldenburger in an e-mailed response to ICIS news’ queries on Thursday.

ONGC Petro-additions Ltd (OPaL), which is developing the $3bn (€2.2bn) Dahej project, has been on the lookout for a strategic partner and was also considering an initial public offering (IPO).

India’s state-owned Oil and Natural Gas Corp (ONGC) has a 26% stake in OPaL while Gujarat State Petroleum Corporation (GSPC) has a 5% interest. GAIL is another shareholder with an initial 9% stake in OPaL. ONGC was reported to have agreed to raise GAIL's stake to 19%.

OPaL’s Dahej project will have a 1.1m tonne/year cracker and derivatives complex slated to start commercial production in December 2012.

The scope of the Dahej project “fits well with LyondellBasell’s polyolefins business,” said Oldenburger.

“Today, LyondellBasell is a leading importer of polyolefin products into India. Therefore, we are exploring how this project might help us to optimize our Asia asset footprint,” said Oldenburger.  

The Dahej project includes downstream units, including a 1.08m tonne/year high density polyethylene (HDPE) and linear low density PE (LLDPE) plant, a 360,000 tonne/year polypropylene (PP) plant, a 95,000 tonne/year butadiene unit, a 135,000 tonne/year benzene line and a 34,000tonne/year butene 1 plant.

But LyondellBasell’s financial predicament calls into question the means with which it will raise the funds to acquire a stake in the project. The company’s US operations have filed for bankruptcy protection while LyondellBasell continues to miss payments on its European bonds.

Asked how much stake LyondellBasell is willing to take on the project and how it will go about funding the investment, Oldenburger said: “We can not comment on this yet, as discussions with OPaL are ongoing.”

“We are also exploring how our advanced technologies fit into the anticipated product portfolio of OPaL,” he added, citing that LyondellBasell also offers strong marketing and sales capabilities for OPaL.

Notwithstanding its financial difficulties, the company will continue to seek joint venture partnerships in Asia, where prospects for petrochemical industry growth remain strong.

“Through our joint ventures in Asia, we maintain successful, long-standing relationships with producers in the region. Joint ventures will continue to offer significant growth potential for LyondellBasell,” Oldenburger said.

“However, timing and robustness of future investments will need to be carefully reviewed in light of global industry slow-down and financial crisis,” Oldenburger said.

LlyondellBasell has two joint venture companies in Asia, namely, HMC Polymer in Thailand and Polymirae in South Korea, which had not been affected by the Chapter 11 filing in the US, the company said.

“Our business strategy has not changed,” Oldenburger said.

($1 = €0.74)

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By: Pearl Bantillo
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