Total SA's recent acquisition of Petrofina SA should strengthen Petrofina's feedstock supplies for its global polypropylene and polyethylene businesses, but not affect its aggressive North American growth, according to officials at the firm's U.S. subsidiary, Fina Oil and Chemical Co.
Total, a Paris-based oil and chemicals firm, agreed to pay a large premium to acquire Petrofina, a similar firm based in Brussels, Belgium, on Nov. 30 in a stock deal valued at 450 billion Belgian francs, or about $12.9 billion. The new firm will be the world's sixth-largest oil producer.
When current expansions are completed, Dallas-based Fina will rank as North America's second-largest PP resin maker and sixth-largest high density PE producer. Fina also ranks fourth in North American polystyrene production.
Access to Total's oil reserves will greatly enhance Fina's supply of ethylene and propylene feedstocks, Fina spokeswoman Carla Holmes Meadows said.
``The acquisition is going to make our petrochemicals business more attractive,'' Holmes Meadows said. ``We're a strong player in those markets and this will only strengthen our position in the U.S. and abroad.''
Fina's plans to add 550 million pounds of PP in La Porte, Texas, and 400 million pounds of HDPE in Bayport, Texas, will proceed as planned. The company initiated final start-up procedures in La Porte in late November, and should have the Bayport expansion fully operational by mid-December.
When completed, the La Porte site will have 2.15 billion pounds of capacity, making it the world's largest PP plant.
Robert Eller, an industry analyst based in Akron, Ohio, said the Total/Petrofina deal could give Fina a price advantage on propylene and ethylene monomer and is a sign of the PP market's move toward globalization.
``With the exception of Montell, most polypropylene producers are regional players,'' Eller said. ``In the past that wasn't an issue because markets like film were regional as well. But now markets like automotive and appliances are changing to favor global suppliers.''
The Total/Petrofina deal also could give Fina some much-needed financial strength as the PP industry fights its way through a global price recession, Eller said.