30 July 2013 17:50 [Source: ICIS news]
(adds remarks by Westlake CFO Steven Bender in paragraph 16)
HOUSTON (ICIS)--Eastman Chemical continues to evaluate options for its excess ethylene position at Longview, ?xml:namespace>
Eastman, which has three operating and one idled olefin cracker at
CFO Curt Espeland told analysts during Eastman’s Q2 results conference call that Eastman’s options include divesting the two smaller units and the idled cracker at Longview, or it could a agree a “capacity reservation” arrangement with another firm.
In addition, the excess ethylene could be used to feed a new downstream derivatives facility another firm may want to build.
Espeland ruled out that Eastman may sell the larger
“We believe that ownership of our larger [
At the same time, Eastman intends to retain the cost advantage of its fully-integrated propylene position at
Espeland said that Eastman was making “good progress” in pursuing options with “multiple parties”.
“The data room has been set up for some time, and there have been a number of management presentations, as well as a number of visits to the
“Multiple parties have expressed interest," he added.
However, Espeland said that Westlake Chemical, which owns the common carrier ethylene pipeline between Longview and Mont Belvieu in Texas, earlier this month changed the tariff on the pipeline “and effectively eliminated the ability of a third party to move ethylene off site".
Espeland said that Eastman filed a complaint with
“If resolution to this [tariff] issue is prolonged, it will continue to delay our efforts" to find a solution for the
Eastman CEO Jim Rogers referred analysts, who repeatedly raised the issue during the call, to Westlake's Q2 earnings call on Tuesday.
“You might want to ask [
However, Westlake CFO Steven Bender - when asked about the dispute during
Espeland added that investors seemed to be spending too much time on the
“We are a large company with a great portfolio of businesses, and it doesn’t necessarily make sense to me to decide whether or not to buy Eastman stock based on what we do with our excess ethylene position alone,” he said.
Earnings from selling the 700m lbs/year of excess ethylene into the merchant market accounted for about 3-5% of Eastman’s overall annual earnings in the last few years, he said.
Additional reporting by Ken Fountain
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