Back in 2006, ExxonMobil, feuding with Venezuelan president Hugo Chavez, pulled out of a proposed project that it had been kicking around since 1999 to build an ethylene steam cracker in Jose, Venezuela, with that country’s state oil company, PDVSA.
Braskem quickly assumed ExxonMobil’s place with an even bigger project to build ethylene, polyethylene, propane dehydrogenation, and polypropylene plants. The price tag for the $4.5 billion investment was a couple of billion more than the ExxonMobil venture would have spent.
Well, at the DeWitt & Co. conference in Houston yesterday, it seemed like the Braskem project may be stuck in a holding pattern. Speaking at the conference, Manoel Carnaúba Cortez, executive vice-president of Braskem’s petrochemicals unit, disclosed that the propane dehydrogenation plant has been called off. The partners will now study building a polypropylene plant at a PDVSA refinery that has available propylene. The ethylene and polyethylene plant will be delayed from its proposed 2014 start up as well.
“It seems like our partners are short of money right now,” he noted.
When a project goes through various permutations and reevaluations, usually that’s a sign that the project is being forgotten about.
That said, Dow Chemical and Saudi Aramco are reportedly mulling a relocation of their slated chemical complex from Ras Tanura, Saudi Arabia, to Al Jubail, Saudi Arabia. I hesitate to compare this project with the Venezuelan one beyond the superficial similarities. The Ras Tanura project is about four or five times the size of the Venezuelan project. Saudi Aramco completed a similar project, Petro Rabigh, with partner Sumitomo last year. And, though Braskem is a competent firm, Dow does have more experience in international projects.
There could be logistical and site advantages that will make Al Jubail a better choice.
Moreover, Dow chemical is looking to form a joint venture for its polyethylene and basic chemicals businesses. Dow executives have repeatedly said that they are talking with state owned enterprises that have access to resources. Saudi Aramco seems like a potential partner for those businesses. Some clarity about the relationship between the two firms may help the new project get off the ground.
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