Saudi Aramco to invest $18bn in U.S., Huntsman and Clariant to merge, Eastman expands plastics biz

Our pick of the latest petrochemicals news you need to know

Motiva's Port Arthur complex in Texas is the largest refinery in the U.S. Photo: Motiva Enterprises

Saudi Aramco’s $18 billion investment in U.S. signals growth into chems

Saudi Aramco plans to spend $18 billion in the next five years to expand its operations in the Americas, mainly in its U.S. subsidiary Motiva Enterprises, the company said in an announcement on May 25th.

The May 25th announcement did not say if it was intended to supersede the May 20th similar announcement of investments that were part of the Saudi-U.S. CEO Forum. At that time, the Saudi state-oil giant said it planned an initial investment of $12 billion in Motiva with a likely $18 billion to follow by 2023.

Motiva called the $18 billion estimate "a general framework of opportunities" to increase refining capacity, branch into chemicals, and expand its commercial operations, marketing and brand presence.

The company also said the expansion may not be solely focused on its current operations but may involve new sites.

Since the completion of the expansion of the Port Arthur, Texas refinery in 2012, which more than doubled its capacity to refine 603,000 barrels of crude oil per day, Motiva has weighed plans for further expansion of the plant.

Saudi Aramco also has looked at acquiring at least one additional U.S. Gulf Coast refinery and visited chemical plants for sale.

U.S. refiners preparing for domestic gasoline demand to peak within 20-30 years are looking at increasing exports of diesel and jet fuel and expanding petrochemical production.

Motiva became a wholly owned subsidiary of Saudi Aramco on May 1 with the split of a 19-year partnership between Aramco and Royal Dutch Shell.

Hunstsman, Clariant merger would create chemicals mega giant

Two chemical giants U.S. Huntsman and Switzerland’s Clariant have agreed to merge in an all-stock deal that would create a chemicals mega giant worth about $20 billion. The new company will be known as HuntsmanClariant.

Photo: Peter R. Huntsman (left), president and CEO of Huntsman Corporation, and Hariolf Kottmann, president and CEO of Clariant agree to giant merger. Photo courtesy of Huntsman Corporation.

On a pro forma 2016 basis, the combination of both companies will create a leading global specialty chemical company with sales of $13.2 billion, an adjusted EBITDA of $2.3 billion and a combined enterprise value of approximately $20 billion at announcement.

Huntsman CEO and company namesake Peter Huntsman will serve as the merged company's CEO, while Clariant CEO Hariolf Kottman will be the chairman of the board.

The deal is expected to close by the end of 2017, subject to approval by the shareholders of both companies and approval by the relevant regulatory authorities.

The companies expect to achieve around $400 million in cost savings by teaming up, according to their joint press release.

Combined, HuntsmanClariant would manufacture coatings, resins and other chemicals for a wide variety of industries and would employ more than 32,000 people worldwide.

Eastman will invest $11.7 million in Virginia

Eastman Chemical will grow its plastic films division by investing $11.7 million in its manufacturing facility in Henry County, Virginia.

The expansion will increase production of high performance films for the automotive and architectural markets sold under the Llumar and Suntek brand names, officials with Eastman said in a press release.

The project is expected to be completed by the end of the year and will increase capacity for both paint protection and window films.

Performance Films is a part of Eastman's Advanced Materials business segment, which accounted for about 27% of the firm's $9 billion sales total in 2016.