PARIS (Reuters) - French oil and gas major Total has made a final investment decision to expand its Texas Bayport Polymers joint venture to double polyethylene production capacity to around 1.1 million tonnes a year, the company said.
Total said it aimed to become a major player in the U.S. polyethylene market when it announced the joint venture in March 2017 with Borealis and Canada’s Nova Chemical.
The Bayport project is in line with the company’s $3 billion program that began a year ago with a $1.7 billion investment to build an ethane steam cracker at its Port Arthur refining complex in Texas.
The cracker will process ethane, which is abundantly available from U.S shale gas at competitive prices, and will supply Bayport polyethylene units. Production is expected to start in 2021.
The new unit is expected to have a capacity of a 625,000 tonnes a year, that will added to the existing 400,000 tonnes per year unit.
The Bayport unit engineering, procurement and construction has been awarded to the company McDermott, Total said.
Polyethylene is used in packaging, pipes, bottles, plastics and other composite materials. It is also seen as a growing market, that Total is targeting with a global expansion of its petrochemicals refining units.
“The project is in line with our strategy to develop petrochemicals at our major integrated (refining) complexes and leverage competitively priced feedstocks,” said Bernard Pinatel, Total’s President for Refining and Chemicals.
Pinatel said light materials are increasingly used as substitutes for metals in various industrial sectors such as transport and energy, all of which is lifting demand for plastics and polymers.
“It is a market that is growing by 3 to 4 percent per year,” Pinatel said.
As part of this expansion into the polyethylene market, Total and Saudi Aramco had said in April they would invest around $5 billion to build a petrochemical complex at their Jubail Satorp refinery.
In May, Total also signed a $1.5 billion deal with Algeria’s Sonatrach to build a polypropylene plant in western Algeria that will supply plastic to the Algerian and wider Mediterranean market.
Last December, its South Korean joint venture with Hanwha Group had also said it would invest $331 million in the group’s refining and petrochemicals platform to increase polyethylene output by 400,000 tonnes per year by 2019.
That increased investment was planned to deal with growing demand, particularly from China.
Reporting by Bate Felix; Editing by Sudip Kar-Gupta