LyondellBasell Industries AF SCA, the world's largest polyolefins maker, is ending its business relationships in Iran, Sudan and Syria.
The decision is the result of a business review that began more than a year ago, and was affected by both an increased number of American executives on LyondellBasell's management team and by the firm's upcoming listing on the New York Stock Exchange, company spokesman David Harpole said by phone Aug. 25.
Recent U.S. government sanctions against Iran may have played a role in the firm's decision, but they weren't a deciding factor, according to Harpole.
Our new management team began a review of our portfolio and decided that we need to do business differently going forward, he said.
LyondellBasell's business in Iran, Sudan and Syria largely consists of licensing technology to companies that make polypropylene and other products in the region. The firm's Spheripol-brand PP technology is the world's most widely used.
The company which is based in Rotterdam, the Netherlands, and has a large U.S. office in Houston declined to provide details of its business relationships or to identify specific licensees. Arak Petrochemical Co., a unit of state-owned National Petrochemical Co. of Iran, has licensed both PP and polyethylene technology from LyondellBasell and its predecessor firms for several years. APC operates a large petrochemical complex in Arak, Iran.
Given the unsteady political climate of Iran, there's virtually no way that LyondellBasell can stop its licensees from producing PP using its technology, said market analysts Balaji Singh and J.N. Swamy, both of Chemical Market Resources Inc. in Houston.
LyondellBasell can stop selling catalysts needed for PP production to Iranian firms, but they then can buy similar catalysts from other firms, such as Chinese plastics and chemicals maker Sinopec, which has expanded its business in recent years.
U.S. chemical firms W.R. Grace and Albemarle Corp., and German chemicals leader BASF SE, make similar catalysts, but aren't likely to sell to Iran because of the U.S. sanctions, CMR President Singh said.
Sinopec stands to benefit from this situation, Swamy said.
A bigger challenge, according to Swamy, might be sourcing aluminum co-catalysts, which also are needed for PP production. Albemarle, U.S. firm Chemtura Corp. and Dutch firm Akzo Nobel NV make co-catalysts, but are unlikely to sell to Iran for political reasons.
That would leave Chinese supplier PetroChina, but Swamy said that firm might not have enough co-catalyst supply to allow Iranian PP makers to continue producing while using LyondellBasell technology.
But any co-catalyst supply issue might be solved in early 2012, when Saudi Basic Industries Corp. and Albemarle open a joint venture firm in Saudi Arabia. Although U.S. firm Albemarle will own half of that venture, it may be able to supply Iranian firms, since the venture will be based outside of the U.S., Swamy said.
The catalyst market has undergone great change in the last decade as resin makers have been buying from numerous suppliers, not just the ones they licensed technology from.
Producers didn't want to remain tied to the licensor, especially with the chance of there being sociopolitical issues in other parts of the world, Swamy said.