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NEWS RELEASE
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FOR MORE INFORMATION CONTACT:
FINA Carla Holmes (214) 706-2055
BASF Felix Gress (201) 426-2305
(9-24)
FOR IMMEDIATE RELEASE
BASF AND FINA SELECT TEXAS GULF COAST REGION
TO BUILD WORLD'S LARGEST STEAM CRACKER
PORT ARTHUR, TEXAS, SEPTEMBER 24,1997 -- BASF Corporation, Mount Olive,
New Jersey, and FINA, Inc. (AMEX: FI), Dallas, Texas, announced today they
intend to establish a joint venture to build the world's largest liquids steam
cracker. The facility, which represents an investment of approximately $800
million excluding long-distance pipelines, will be located at FINA's Port
Arthur, Texas, Refinery, and will be operated by BASF Corporation.
According to the letter of intent, the unit will be the largest single
train olefins production facility ever built with a nameplate capacity of 1.8
billion pounds (820,000 metric tons) ethylene and 1.95 billion pounds (880,000
metric tons) propylene. The cracker, which is scheduled for start-up at the end
of the year 2000, will use a special technology for enhanced propylene
production. Completion of the joint venture is dependent on the execution of a
definitive agreement, final approval by the companies' boards of directors and
various regulatory approvals, including Federal Trade Commission review and
environmental permits.
SIGNIFICANT COST ADVANTAGES FOR BOTH COMPANIES
During the last six months, BASF and FINA have developed their
partnership in competition with their independent projects. The proposed joint
venture represents the best solution for both companies for three reasons.
First, BASF and FINA achieve mutually beneficial ethylene and propylene
production
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primarily for internal use. Second, both companies derive significant cost
advantages from integrating the cracker with FINA's existing refinery. Third,
they gain significant economies of scale, which makes this an attractive and
efficient investment.
The integration of the cracker into FINA's refinery will provide an
opportunity to optimize refinery and cracker feedstocks, as well as byproduct
streams. The partnership will take advantage of BASF's steam cracker operating
experience and FINA's expertise in refining and acquiring hydrocarbon
feedstocks.
"With its innovative design and the synergies that we derive from the
cracker's integration into a refinery network, this project will provide us
with significant cost advantages," said Carl A. Jennings, President of BASF
Corporation's Chemicals Division. "This investment will be the largest that
BASF has ever made outside of Europe, and it is of major importance to our
company because it will ensure an economically attractive, long-term product
supply and other key precursors for future expansion in the NAFTA region. We
are especially delighted to work with such a strong and progressive partner as
FINA," he added.
According to FINA, Inc. President and CEO, Ron Haddock, building the
state-of-the-art steam cracker facility at its Port Arthur Refinery plays a
significant role in the company's long-range business plans. "This investment
is of strategic importance to FINA because it will increase integration between
our refining business and our premiere chemical businesses, while supplying raw
materials to our world-scale derivative plants, where we produce styrene,
polystyrene, polyethylene and polypropylene."
This project is a key step in differentiating FINA's refining business
from the competition. FINA's Port Arthur facility, one of the nation's leaders
in efficient production of fuel products, has a strategic focus to expand
production of its
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chemical feedstocks. "The opportunity to fully utilize our refining capacity to
support a jointly-owned, steam cracking operation with an experienced and
outstanding operating partner, like BASF, provides the basis for a very
competitive manufacturing site," Haddock said.
SATISFIES BASF'S AND FINA'S INCREASING INTERNAL ETHYLENE AND PROPYLENE DEMAND
The cracker's capacity is designed for mainly captive usage in both
companies. The facility will help satisfy BASF's additional propylene
requirements that will nearly double as a result of current oxo alcohol and
acrylic acid expansions at the company's Freeport, Texas site. In addition, the
cracker will secure the supply of ethylene to produce ethylene oxide, styrene
and other derivatives. BASF's manufacturing sites in Freeport and Geismar,
Louisiana can be supplied via pipelines from the new cracker.
In addition to providing an attractive outlet for materials produced at
FINA's refinery, this project will help ensure long-term security of raw
material supply for FINA's rapidly expanding plastics business. FINA recently
announced expansions at two of its polymer manufacturing facilities, increasing
the La Porte, Texas polypropylene capacity to 2.1 billion pounds per year, and
the Pasadena, Texas polyethylene plant to 850 million pounds per year.
CREATING NEW JOBS
Construction on the new cracker will begin in September 1998, and take
about 28 months to complete. Construction jobs will peak at approximately
2,000. After completion, the cracker will provide approximately 150 jobs
directly associated with the operation and maintenance of the facility.
Throughout the negotiations, FINA worked with state and local officials to
evaluate the project's impact on the community. Both the City of Port Arthur
and Jefferson County, Texas, have strongly supported construction of the
facility at the Port Arthur site.
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CRACKING LONG-CHAINED HYDROCARBON MOLECULES
Steam cracking is a key petrochemical technology used to convert
saturated hydrocarbons such as ethane, propane, naphtha blends or other
feedstocks into olefins and aromatics, including ethylene, propylene,
butadiene, benzene and toluene. The term "steam cracking" describes the cracker
technology. High temperature and dilution steam are used to break down
long-chained hydrocarbon molecules into smaller components, primarily light
olefins such as ethylene and propylene. The term "liquids cracker" refers to
the feedstock, which is typically a blend of petroleum liquids as opposed to
liquefied gases such as ethane and propane.
The cracker products ethylene and propylene are key raw materials for
the production of plastics, fibers, solvents, paints and surfactants. These
products are used in various industries, including housing, construction,
automotive, textile and clothing, beverage containers, cosmetics and
surfactants.
BASF Corporation, headquartered in Mount Olive, NJ, is the NAFTA region
member of the BASF Group. With U.S. sales revenue of $6.5 billion in 1996, BASF
Corporation is among the top ten producers of chemicals in the United States,
Canada and Mexico. Its diversified product mix includes chemicals, nylon
fibers, polymers, automotive coatings, colorants, pharmaceuticals, agricultural
products and vitamins. In the NAFTA region, the company and its subsidiaries
have more than 15,000 employees, of which more than 13,000 are based in the
United States and Canada.
FINA, Inc., (AMEX:FI) through its subsidiaries, engages in crude oil
and natural gas exploration and production, and natural gas marketing;
petroleum products refining, supply and transportation, and marketing; and
chemicals manufacturing and marketing. Revenues were $4.1 billion in 1996.
Organized in 1956, FINA is part of an international group of companies
affiliated with PetroFina S.A., (NYSE:FIN) headquartered in Brussels, Belgium.
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BASF/FINA STEAM CRACKER
Q1) HOW MUCH DO BASF AND FINA INTEND TO INVEST IN THIS PROJECT?
A1) The project represents an investment of approximately $800 million
excluding long-distance pipelines. It will be a state-of-the-art
operation featuring the latest process technology.
Q2) WHAT IS EACH COMPANIES' LEVEL OF PARTICIPATION IN THIS JOINT VENTURE?
A2) 60:40 BASF and FINA respectively.
Q3) WHY DID BASF AND FINA DECIDE TO FORM THIS JOINT VENTURE?
A3) Investment and project economics. Approximately two thirds of the
existing steam crackers in the NAFTA region are integrated into
refinery networks. The cooperation between a chemical company, such as
BASF, and a petrochemical company, such as FINA, results in
significant economic advantages and represents a win-win situation for
both partners.
Q4) WHERE WILL THE FACILITY BE LOCATED?
A4) The new steam cracker will be located adjacent to FINA's refinery in
Port Arthur, Texas, and will be operated by BASF Corp. Construction
will begin in September 1998.
Q5) WHERE IS FINA'S PORT ARTHUR, TEXAS SITE LOCATED EXACTLY AND WHAT KIND
OF MANUFACTURING IS LOCATED AT THIS SITE?
A5) FINA's Port Arthur Refinery is located in Southeast Texas, at the
mouth of the Neches River, and close to Beaumont, Texas, and the Gulf
Coast. It is a 180,000 barrels per day facility, that was transformed
in the last two decades into a sophisticated complex known for
top-rated efficiency.
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The refinery primarily produces transportation fuels: Gasoline,
diesel, jet fuel, and, to a lesser extent, propane, butane, and bunker
oil. It also manufactures asphalt and provides propylene, benzene,
toluene, and xylene for chemical uses. Its crude and other feedstocks
now are mostly received from ocean-going vessels via a Gulf of Mexico
marine dock on the Neches River. Refinery products are shipped by
pipeline, truck and ocean-going vessels.
Q6) WHAT IS A STEAM CRACKER?
A6) A "steam cracker" is a petrochemical plant that turns naphtha and
light hydrocarbons into ethylene, propylene and other chemical raw
materials. These chemicals can be transported, via pipeline and other
methods, to chemical and polymer facilities and converted into
olefin-based products.
Q7) WHAT IS THE SPECIAL TECHNOLOGY THAT WILL ENHANCE PROPYLENE PRODUCTION?
A7) It is called metathesis technology. Metathesis is a general principle
of olefin conversion, which can be used to enhance the propylene
output of steam crackers. It is based on a catalytic re-grouping of
double bonds between two different olefins, and involves the catalytic
disproportion reaction of ethylene and butylene to make propylene. By
using this technology, BASF and FINA improve the propylene/ethylene
production ratio to 11:10, as compared to 6:10 without metathesis.
This will enhance propylene production by 83 percent.
Q8) HOW WILL BASF'S JOINT VENTURE WITH UTP AT GEISMAR, LA. BE AFFECTED?
A8) The relationship with UTP at Geismar will not be affected by this
investment.
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Q9) HOW WILL THIS INVESTMENT AFFECT FINA'S PROPYLENE JOINT VENTURE WITH
ULTRAMAR DIAMOND SHAMROCK IN MONT BELVIEU, TEXAS?
A9) The relationship with UDS will not be affected by this investment.
FINA will still be a net buyer of propylene.
Q10) WHAT IS THE SOURCE OF BASF'S AND FINA'S CURRENT ETHYLENE AND PROPYLENE
SUPPLY?
A10) BASF's current demand is partially satisfied through a 42 percent
participation in an ethane based cracker operated in cooperation with
Union Texas Petroleum (UTP) in Geismar. The total annual ethylene
capacity of this cracker is 1.2 billion pounds, of which 520 million
pounds per year is provided to BASF's Geismar site. This partnership
will not be affected by the new investment. BASF also operates heavy
feedstock steam crackers at its sites in Ludwigshafen, Germany and
Antwerp, Belgium.
FINA currently has no internal ethylene supply, but supplies 500
million pounds per year of polymer grade propylene through its
one-third participation in a propylene splitter with UDS in Mont
Belvieu, Texas. This facility is currently being expanded to increase
FINA's share to 1 billion pounds per year by the fall of 1998. This
partnership will not be affected by the "steam cracker" investment.
Even with both sources of propylene, FINA will still be a net buyer of
propylene.
Q11) FOR HOW LONG HAVE BASF AND UTP HAD A CRACKER COOPERATION?
A11) For 30 years.
Q12) WHO WILL BE YOUR CONTRACTORS FOR THIS PROJECT?
A12) ABB Lummus Global, Bloomfield, New Jersey (headquarters) and Houston,
Texas (office) has been retained to develop detailed engineering and a
lump sum turn key estimate. Contract award is contingent on meeting
project targets and is expected for January 1998.
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Q13) WHAT ARE THE FUTURE DOWNSTREAM EXPANSIONS THAT BASF AND FINA HAVE IN
MIND AND THAT WILL DEPEND ON HAVING THIS CRACKER AVAILABLE?
A13) The cracker will provide BASF and FINA with many additional
manufacturing opportunities. BASF has major capacity expansions
underway for oxo alcohols and acrylic monomers at its site in
Freeport, Texas. FINA has major capacity expansions underway at its La
Porte, Texas, polypropylene plant and at its Pasadena, Texas,
high-density polyethylene plants.
Q14) HOW WILL BASF AND FINA SHIP ETHYLENE AND PROPYLENE FROM THE CRACKER TO
ITS MANUFACTURING SITES?
A14) By pipeline. Some pipelines will be constructed to connect the cracker
with existing pipeline networks at the Gulf Coast.
Q15) HOW MUCH OF THE CAPACITY WILL BE SOLD INTO THE MARKETPLACE?
A15) Very little. The cracker's capacity is designed for captive usage
within BASF and FINA.
Q16) HOW WILL FINA USE THE CRACKER PRODUCTS?
A16) FINA will use ethylene to produce high-density polyethylene and to
manufacture styrene for internal conversion into polystyrene. FINA
will use propylene to produce polypropylene. FINA will continue to be
a net buyer of olefins.
Q17) HOW MANY JOBS WOULD BE CREATED WITH THIS NEW INVESTMENT?
A17) Approximately 150 jobs will be associated with the operation and
maintenance of the facility.
Q18) WHAT KIND OF SUPPORT DID BASF AND FINA RECEIVE FROM THE PORT ARTHUR
COMMUNITY AND JEFFERSON COUNTY?
A18) Community support was outstanding. FINA worked closely with local and
state officials to evaluate plans for this project throughout the
negotiations.
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Q19) WHAT IS FINA, INC.?
A19) FINA, Inc., (AMEX:FI) through its operating subsidiaries, engages in
crude oil and natural gas exploration and production, and natural gas
marketing; petroleum products refining, supply and transportation, and
marketing; and chemicals and plastics manufacturing and marketing.
Revenues were $4.1 billion in 1996. Organized in 1956, FINA is part of
an international group of companies affiliated with PetroFina S.A.,
(NYSE:FIN) headquartered in Brussels, Belgium.
Q20) WHAT IS BASF CORPORATION?
A20) BASF Corporation, headquartered in Mount Olive, NJ, is the NAFTA
region member of the BASF Group. With U.S. sales of $6.5 billion in
1996, BASF Corporation is among the top ten producers of chemicals in
the United States, Canada and Mexico. Its diversified product mix
includes chemicals, nylon fibers, polymers, automotive coatings,
colorants, pharmaceuticals, agricultural products and vitamins. In the
NAFTA region, the company and its subsidiaries have more than 15,000
employees, of which more than 13,000 are based in the United States
and Canada.
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