LyondellBasell targets $3bn capex for new US PE, PO/TBA projects

05 April 2017 19:53 Source:ICIS News

LyondellBasell targets $3bn capex for new US PE, PO/TBA projects

NEW YORK (ICIS)--LyondellBasell is planning around $3bn in capital investment (capex) to build two major projects in the US – its new Hyperzone high density polyethylene (HDPE) plant and a new propylene oxide/tertiary butyl alcohol (PO/TBA) facility, its chief financial officer (CFO) said on Wednesday.

The company is ready to “break ground in one month” on its 500,000 tonne/year HDPE expansion in La Porte, Texas, said Thomas Aebischer, CFO of LyondellBasell, at the company’s investor day.

The HDPE project, expected to start up in mid-2019, is expected to cost $700m-750m and generate earnings before interest, tax, depreciation and amortisation (EBITDA) of $150m-200m/year based on average 2016 margins.

Also, LyondellBasell will make a final investment decision (FID) on its PO/TBA project in Houston, Texas by Q3 2017. The plant, which will have capacity of 450,000 tonnes/year of PO and 900,000 tonnes/year of TBA, is targeted for start-up in 2021, a slight delay from the previous timeline of late 2020.

“We rushed a few projects earlier – we are learning and maturing. We want to make sure we have the up-front scope right,” said LyondellBasell CEO Bob Patel in response to an analyst who noted the slip in the timeline for the PO/TBA project.

“PO/TBA is the low-cost technology to produce PO. If it’s not us [expanding capacity], then who? But it’s not just for [market] share – we want to earn a good return,” said Patel.

“We have many other projects in the queue. By Q3, it’s time. Let’s decide, and if not, let’s move on to the next one,” he added.

The PO/TBA project would cost $2.0bn-2.5bn, and generate $300m-400m in annual EBITDA based on average 2016 margins, Aebischer noted.

Pictured above: LyondellBasell has several chemical plants in La Porte, Texas. The company is expanding high density polyethylene (HDPE) at the site, as well as building a new propylene oxide/tertiary butyl alcohol (PO/TBA) facility in Houston.

By Joseph Chang