BASF And Total Take Over Sabina

Here’s a development I find interesting. BASF and Total Petrochemicals are taking over Shell Chemicals’ interest in their Sabina joint venture. Sabina started up in 2004 in Port Arthur, Texas, to extract butadiene from C4 streams. Two-thirds of these streams came from Shell’s Deer Park cracker. The rest was supplied by a naphtha-based cracker Total (then briefly known as Atofina) and BASF had just completed at the time. It started up with a capacity for 400,000 metric tons of butadiene. Sabina also alkylates iso-butene into octane for gasoline blends. The n-butene cut goes to a metathesis unit, giving the cracker venture greater propylene yield. Shell owned 60% of the venture, BASF had a 24% stake, and Total had a 16% interest. With the change in ownership, Sabina will have a 60% BASF and 40% Total ownership, like their cracker venture. Shell hasn’t put out a press release on this. When I asked the company why it was exiting the venture, they sent me this statement:
“Shell has signed an agreement to exit the Sabina venture effective August 1, 2011. This action fits well with the Shell strategy to streamline and concentrate its downstream portfolio.  Shell plans to continue supplying our customers with product and accepting supply from our feedstock suppliers without interruption.”
The important context here is that like many other chemical makers, Shell has been moving to lighter feedstocks because of ethane from natural gas shale. Shell has even undertaken capital projects in Deer Park and Norco, La., to enable it to crack lighter feeds. As a result, Shell probably has less C4’s in its system now and likely can’t or doesn’t want to be tied up with the commitments to Sabina. If that is the case, I wonder if Sabina is now struggling to find C4s.

Author: Alex Tullo

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