The LAO industry has faced a very difficult environment for the past few years, with overcapacity, slow demand growth, and high feedstock and energy costs, said George Tacquard, senior vice president of BPs global derivatives business. The Pasadena site is our oldest production site, and the closure of these older assets will allow our LAO business to focus resources on keeping our two newer sites at Feluy (Belgium) and Joffre (Canada) competitive.

The Pasadena plant has capacity to make 500,000 metric tons of LAOs per year. BP closed the plant in late February 2003, citing the same adverse market conditions that it mentioned this month. But it reopened the facility just a month later, saying it was forced to reconsider because of contractual obligations.

A company spokesman said yesterday that those issues have been remedied and that BP does not expect to reopen the plant this time.

Production at the Pasadena plant will cease by the end of 2005 and the plant will be dismantled, spokesman Scott Dean said.

One of the main varieties of LAOs, decene, is the principal ingredient in polyalphaolefins, which claim approximately 20 percent of LAO output. The LAO market has been chronically oversupplied for the past several years, largely because of construction of new plants that added more than 450,000 tons of capacity. BP contributed to the situation by opening its 250,000-ton Joffre plant in 2001.

The Pasadena plant has nearly as much capacity as BPs other two plants combined – Feluys capacity is 300,000 tons – but the company maintains that the smaller plants are large enough to meet demands of its customers.