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Mexichem and OxyChem form ethylene JV

By: Stephen Downer

November 1, 2013

MEXICO CITY — Mexican PVC and specialty chemicals maker Mexichem SAB de CV and Occidental Chemical Corp. have formed a $1.5 billion, 50-50 joint venture to build an ethylene cracker with an annual capacity of 1.2 billion pounds at an OxyChem complex in Ingleside, Texas, as well as pipelines and storage in Markham, Texas.

The companies announced Oct. 31 that construction will start in mid 2014 and commercial operations in the first quarter of 2017.

"Essentially all" the ethylene produced by the cracker will be used to make vinyl chloride monomer, using existing VCM capacity at the Ingleside site, they said. "VCM will be delivered to Mexichem to produce [PVC resin] and PVC piping systems."

The cracker will strengthen Mexichem by enabling it to take advantage of competitive energy and feedstock costs in the United States, a result of shale gas development, said Mexichem Chairmn Juan Pablo del Valle Perochena.

The "high degree of integration" between the two companies will create "highly competitive assets on a global basis," Chuck Anderson, OxyChem's president, added.

According to the news release, Los Angeles-based OxyChem, a wholly owned subsidiary of Occidental Petroleum Corp., will build and operate the cracker. OxyChem claims to be the world's largest VCM producer.

The cracker joint venture is the second involving a Mexican company to be announced in the past three years. In March 2010 Brazilian petrochemicals giant Braskem SA and Mexico's Grupo Idesa SA de CV formalized an agreement with Pemex Gas y Petroquímica Básica to build a $2.5 billion petrochemical complex, called Ethylene XXI, in Coatzacoalcos, which will include an ethylene cracker and three polymerization plants. Production at that site is scheduled to start in late 2015.