Motiva’s USD 6.6 Billion Texas Expansion Project Currently on Hold, Some Hopes of Reassessment Persist

Uncertainties shrouded over Motiva’s much-awaited petrochemical expansion project after several media sources reported the company’s decision to suspend its USD 6.6 billion investment plan in its Port Arthur refinery at Texas. As per the sources, the decision to halt the construction of the biggest refining and petrochemical project in USA was taken with Saudi Aramco revisiting its diversification plan and increasing its focus over its core business of pumping oil and natural gas. The plan was intended to build two new petrochemical plants in addition to its existing 630,000 barrels-a-day (bpd) Port Arthur refinery.

However, both Motiva and Saudi Aramco sidelined from commenting on the move, citing the news as “market rumors or speculations”.

The multi-billion-dollar project whose excavation and engineering work was abruptly suspended in Q4 2019, when Motiva, a 100%-owned subsidiary of Saudi Aramco, bought a 634 KTPA mixed-feed cracker in Port Arthur from Flint Hills Resources LLC which was strategically located in its close proximity.

Motiva originally intended to construct an Ethane cracker that produces Ethylene, a key component for making plastics and solvents, as well as other downstream units. However, some sources close to the company have also mentioned that the project may get a go ahead without the Ethane cracker which is no-longer needed. Demand flourishing from the construction, manufacturing and consumer goods which are largely Ethylene derived backed with supply disruptions have resulted in rise of Ethylene and other petrochemical intake and may give a much-needed push for the project’s reconsideration.

There are anticipations that the petrochemical project will be on hold for at least a year, but the plans could be reconsidered. As per some market estimates, there are hopes that revival talks may take place but not before 2022 as consumption of plastics and chemicals is blossoming in the US with feedstock Ethylene keeping the market participants on guard due to volatility in the market in recent times.

Currently, Ethylene is trading at USD 1160-80 per MT FOB US Gulf Coast after witnessing a jump of USD 242 per MT since July 2nd week.