BP announced Monday that it is putting its linear alphaolefins and polyalphaolefins business on the sales block as it adopts a new strategy for its petrochemicals segment.
Separately, Flint Hills Resources LLC announced yesterday that it has agreed to buy BPs performance chemicals unit, a manufacturer of maleic anhydride for the lubricants industry.
BP and Chevron Phillips Chemical are the worlds two biggest producers of linear alphaolefins – about 20 percent of which are used to produce polyalphaolefin synthetic base stocks and lubricant additives. BP produces LAOs at three plants – in Pasadena, Texas, Feluy, Belgium, and Joffre, Canada – with combined annual capacity of 1.1 million metric tons. It makes PAO at Feluy and at La Porte, Texas.
Demand for PAOs boomed during the 1990s but has slowed the past few years in the face of competition from Group III mineral base oils. The LAO market suffers from overcapacity after the opening of several large plants since 2000. BP acknowledged the unattractiveness of the LAO market when it temporarily closed its Pasadena plant in 2003.
Still, BP said this week that its olefins business is a good one, as is its fabrics and fibers division, which also goes up for sale.
These are very good businesses, and we think they will continue to prosper under the right ownership, BP spokesman Scott Dean said. Its just that they are not natural fits for a company that is as heavily focused on energy and refining as BP is.
BP plans to keep operations that produce: purified terephthalic acid, which is used to produce polyester and polyethylene terephthalate; paraxylene, a feedstock for PTA; and acetyls, which have widespread use as a chemical intermediate and solvent. The company characterized these as advantaged businesses within its chemicals portfolio.
The performance chemicals unit that Flint Hills agreed to buy has been for sale since March2003. The deal includes a plant in Joliet, Ill., as well as a long-term agreement for the production from a Geel, Belgium plant, which will continue to be operated by BP.
The unit produces maleic anhydride, trimellitic anhydride and purified isophthalic acid. The major application of maleic anhydride is in unsaturated polyester resins, but it is also used in lubricants, plasticizers, coatings, herbicides and food ingredients.
The sale is subject to approval by regulators and other conditions. Flint Hills did not disclose how much it agreed to pay.