* Dow Chemical plans to provide feedstock, use part of
* Final investment decision in 2014 for planned start in
* 70 pct of alpha olefins from planned plant to be sold in
TOKYO, March 18 Japanese oil refiner Idemitsu
Kosan and trading house Mitsui & Co have
agreed to study the feasibility of running a petrochemical plant
in the United States, taking advantage of cheaper feedstock from
a shale gas and oil boom.
The two companies have reached an initial agreement with Dow
Chemical Co, under which the U.S. firm would provide
ethylene supplies for the plant and also take part of its
A final investment decision is expected in 2014 for the
50-50 joint venture to build a plant to start operations in 2016
with capacity of 330,000 tonnes per year of alpha olefins, the
two said in a joint statement on Monday.
Alpha olefins are used as additives in polyethylene and
other synthetic resins and are also used in products ranging
from detergents to high-performance lubricants, with global
demand of over 3 million tonnes a year, the companies said.
Feedstock from Dow would be taken in at the same price as
production cost of the U.S. firm's planned ethane cracker,
making alpha olefins from the planned Japanese venture
competitive in the market, a Mitsui & Co spokesman said.
The two companies declined to comment on the value of
investment, but the Nikkei business daily said on Monday the
plant would cost up to 100 billion yen ($1.05 billion).
Currently, Idemitsu, Japan's third-biggest oil refiner,
operates a unit to produce alpha olefins in Chiba, east of
Tokyo, with capacity of 58,000 tonnes a year.
Idemitsu has sounded out the possibility of building a
second unit outside of Japan as it estimates global demand to
grow by 4 percent a year, a company spokesman said.
The planned plant is expected to sell 70 percent of its
production to users in the United States, with the remaining 30
percent to Asia and Europe, the Idemitsu spokesman added.
U.S. natural gas prices are currently $3.85 per million
British thermal units (mmBtu), well below Asian spot LNG prices
of $16.15 per mmBtu. U.S. chemical industry trade groups expect
prices to remain low for years due to ramped up production from
the shale reserves.
If low prices are sustained, it would give the planned
Japanese petrochemical plant a large cost advantage over
European and Asian rivals, many of whom have to use crude
oil-derived naphtha to make chemicals.