US oil major ExxonMobil and Saudi Arabia Basic Industries (SABIC) said on Monday they are looking into the possibility of launching a new multimillion-dollar petrochemical joint venture on the Gulf Coast of the US.
The two companies are considering locations in South Texas and Louisiana for the project which will include a 1.8mn metric tonnes (mt) a year ethylene-capacity steam cracker that would feed a monoethylene glycol plant and two polyethylene plants, financial news website Platts reported.
SABIC’s chief executive Yousef Al-Benyan told Reuters the company expects to reach a final decision on whether to go ahead with the project by Q2, 2017.
Exxon is basing its interest in the proposed joint venture on predictions for a steady increase in chemical demand through 2040, Platts reported.
Demand for chemicals is expected to grow by about 1% above GDP over the next two of decades, while ethylene demand is seen rising by about 4% a year, Jeff Woodbury, ExxonMobil's vice president for investor relations, told the website.
Woodbury added that to meet this demand an additional 6-7mn mt per year of annual capacity will be required, even with the new announcements and projects currently under construction.
"Our outlook will inform our business strategy and our investment choices, and we see this as a really good opportunity," Woodbury said.
On the back of these projections, a potential petrochemical joint venture with SABIC offers a "really good opportunity”, he added.