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LyondellBasell and Sasol form polyethylene JV

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Hydrocarbon Engineering,


LyondellBasell and Sasol have entered into a definitive agreement to form a 50/50 joint venture (JV) through which LyondellBasell will acquire 50% of Sasol’s 1.5 million t ethane cracker, 900 000 t low and linear-low density polyethylene plants and associated infrastructure for a total consideration of US$2 billion.

The agreement includes customary rights for each partner regarding the potential future sale of its ownership interest. The JV will operate under the name Louisiana Integrated PolyEthylene JV LLC.

“This investment represents a unique opportunity to bring together the best of both companies and create deep, long-term value while immediately realising the many benefits of new, strategically-located, world-scale assets,” said Bob Patel, CEO of LyondellBasell. “This approach is consistent with our strategy of investing in high quality assets that meet our threshold for value creation, while also maintaining our investment grade rating and commitment to our dividend. The transaction is expected to be accretive to both cash flow and EPS within one year with significant upside as market conditions continue to improve.

“We are very pleased to have LyondellBasell join us as a key partner in our US Base Chemicals Business in Lake Charles. LyondellBasell is the ideal partner to ensure the success of these world-class assets with its deep expertise in commodity chemicals,” said Fleetwood Grobler, President and CEO, of Sasol. “This milestone coincides with our 70-year anniversary and represents a significant step in creating Future Sasol, which will be a more sustainable and resilient business for the long-term. We’re excited about this joint venture and look forward to building a mutually beneficial and successful partnership with LyondellBasell.”

Under the terms of the transaction agreements, each JV partner will provide pro-rata shares of ethane feedstocks and will offtake pro-rata shares of cracker and polyethylene (PE) products at cost. LyondellBasell will operate the US Base Chemicals assets on behalf of the JV.

Upon close of the transaction, some Sasol US employees will become employees of LyondellBasell. Sasol will retain full ownership and operational control of its Lake Charles Research and Development complex, Lake Charles East Plant ethane cracker and US Performance Chemicals Business assets in Lake Charles, which produce Ziegler alcohols and alumina, ethoxylates, Guerbet alcohols, paraffins, comonomers, linear alkyl benzene, ethylene oxide and ethylene glycol. The US Performance Chemicals Business is a key part of Future Sasol, consistent with the strategy to increase focus on specialty chemicals where Sasol enjoys differentiated capabilities and strong market positions. Sasol will also retain access to competitively priced onsite ethylene to ensure value chain integration.

The transaction is subject to customary regulatory approvals and approval by Sasol shareholders. The transaction is expected to close by the end of 2020.

Read the article online at: https://www.hydrocarbonengineering.com/refining/05102020/lyondellbasell-and-sasol-form-polyethylene-jv/

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