LyondellBasell mulls US$1.5 bln spend on new plants and expansions

LyondellBasell Industries NV may spend US$1.5 bln on new plants and expansions to add as much as $1 billion a year to pretax earnings by 2016. CEO Jim Gallogly today told participants at the company’s annual Investor Day in New York that LyondellBasell is well positioned for the future. The company has had successive quarters of record results and delivered US$5.5 biln of EBITDA over the last 12 months. “The past 18 months have been a period of significant progress at LyondellBasell,” Gallogly said. “We have rebuilt this company from the plant floor up. We have improved our cost structure, strengthened our balance sheet and enhanced all aspects of our operations. The collective efforts and success of our employees around the world in implementing our back-to-basic strategy is proof we have what it takes to become the premier commodity petrochemical company. We believe we have now earned the right to grow and are well-positioned for the future,” Gallogly said. Highlights of Investor Day 2011 included an overview of the following investments in high-return growth projects: Ethylene Capacity Expansion – an expansion of the La Porte, Texas, steam cracker is expected to increase the annual production of ethylene from low-cost ethane by approximately 850 mln lbs to a total capacity in excess of 2.5 mln lbs per year. China PO/TBA Plant Study –an agreement to conduct a joint feasibility study to construct a world scale PO/TBA plant in Ningbo, China, has been signed by LyondellBasell and Sinopec. The study will recommend the final scope of the project, costs and a construction schedule for a new joint venture plant. Methanol Plant Restart – to take advantage of low-cost natural gas supplies, LyondellBasell plans to restart a 780,000 tpa methanol plant at Channelview, Texas. Ethane Feedstock Flexibility – the Channelview plant is expected to increase its capability to process low-cost ethane feedstocks by an additional 500 mln lbs per year. The company also continues to study a modest ethylene capacity expansion at this site. Co-Product Flexibility Expansion – the company is advancing a project to build a new metathesis unit at Channelview which is planned to increase propylene production by 500 mln lbs per year of equivalent ethylene. Butadiene Expansion at Wesseling – By 40%, from 170 KT to 238 KT per year, through a debottlenecking project. Commenting on the growth projects discussed at Investor Day 2011, Gallogly said, “The North American projects build upon our asset and technology positions, coupled with cheap and abundant natural gas and natural gas liquids, to offer high-returns in a relatively short period. Additionally, they are expected to be completed more quickly and inexpensively than greenfield projects. While only at the feasibility stage, a new PO plant in China offers the potential to be the lowest-cost site in the world. The project in Germany will provide additional value from co-products.