Sunoco Inc. announced March 27 that it will buy Equistar Chemicals LP's polypropylene plant in Pasadena, Texas.
In a related move, Sunoco reached a 15-year agreement to purchase propylene monomer for its Gulf Coast PP plants. The deal, with Equistar and a new limited partnership owned by Equistar and Sunoco, will supply 700 million pounds per year of propylene to Sunoco's PP plants in Pasadena and La Porte, Texas.
The deal, effective March 31, is valued at $190 million, not including the value of the Pasadena PP inventory, which was not disclosed.
Houston-based Equistar, a venture between Lyondell Chemical Co. and Millennium Chemicals Inc., will retain ownership of its Pasadena low density polyethylene unit, but Sunoco will operate that unit as well.
Robert Bauman, vice president of polymer business practice with Nexant Chem Systems in Tarrytown, N.Y., said the supply agreement is typical.
``Any time you purchase an asset, you try to get the feedstock with it,'' he said.
Equistar and Sunoco officials could not be reached before deadline.
``Equistar is a major producer of propylene and Sunoco is a growing, committed producer of polypropylene,'' Dan Smith, Equistar chief executive officer, said in a news release.
``These transactions enable each company to focus on its particular area of expertise. Additionally, the cash received from these transactions will enable Equistar to enhance liquidity, which remains key among our financial priorities.''
Equistar, one of the largest U.S. producers of ethylene, propylene and polyethylene, saw 2002 sales fall to $5.5 billion from $5.9 billion.
With the purchase, Philadelphia-based Sunoco has annual operating capacity of 2.5 billion pounds of PP. The company also operates PP plants in Neal, W.Va., and Marcus Hook, Pa.