Motiva Enterprises says it plans to buy Flint Hills Resources’ chemical plant in Port Arthur, turning the operator of the nation’s biggest oil refinery into chemical producer for the first time.
Motiva, headquartered in Houston, is a subsidiary of the Saudi Arabian national oil company Saudi Aramco. Motiva and an affiliate of Flint Hills Resources of Wichita, Kansas, said Monday that they signed an agreement for Motiva to acquire a 100 percent ownership interest in Flint Hills’ Port Arthur site. The deal is set to close in the fourth quarter this year. Terms of the deal weren’t disclosed.
Flint Hills, controlled by Charles and David Koch, purchased the chemical plant from Huntsman Corp. in 2007 for $770 million. The plant includes ethane cracker which has the capacity to process the natural gas liquid ethane into 620,000 metric tons a year of ethylene, the building block of most plastics. The plant includes another unit that can produce 340,000 tons a year of propylene, another common plastic.
The Flint Hills acquisition comes as Saudi Aramco seeks to diversify its products and geography. It is one of many major oil companies expanding petrochemical holdings as way to support demand for oil and gas, which are chemical feedstocks, and tap into growing demand for plastics.
In March, Aramco also said it will buy a 70 percent stake in the Saudi petrochemical company SABIC. Earlier this year, Aramco also signed a memorandum of understanding with to acquire a 9 percent stake in a Zhejiang Petrochemical’s 800,000 barrel-a-day integrated refinery and petrochemical complex in Zhoushan, China. In June 2018, Motiva said it was no longer considering a massive expansion of its oil refinery and would instead focus on expanding its petrochemical business.
Documents filed with the Texas Comptroller’s office earlier this year show Motiva is considering pouring billions of dollars into building petrochemical facilities in Port Arthur, including a $4.7 billion ethane cracker to produce ethylene, according to additional documents. If the company decides to move forward with the investments and receives the necessary permitting, the project could be completed in 2022.
It’s not clear how this deal with Flint Hills’ would impact those investments. The existing Flint Hills plant produces common building blocks of plastic, ethylene and propylene as well as the chemical cyclohexane.
In April, Motiva Enterprises said it would purchase a pair of historic buildings in downtown Port Arthur for 500 office workers, including an undetermined number of expected new hires.
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