Houston — Chevron Phillips Chemical has deferred a final investment decision on a $8 billion joint venture petrochemical complex project along the US Gulf Coast that was expected in 2021, Phillips 66 said on July 31.
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Company executives did not mention the project or its FID deferral during a second-quarter 2020 earnings call on July 31, as discussions focused largely on coronavirus pandemic fallout on Phillips 66's crude oil and refined fuels businesses.
The company's earnings release noted the FID deferral, but did not specify a new target date.
The project, in partnership with Qatar Petroleum, was announced in July 2019. It is slated to include a 2 million mt/year cracker and two 1 million mt/year high density polyethylene plants. The FID delay will also push the original target startup date past 2024.
Documents filed in January 2019 with the Texas Comptroller's office said CP Chem, a joint venture of Phillips 66 and Chevron, was evaluating the purchase of 1,700 acres in Orange, east of Beaumont in far southeastern Texas, as a possible site for the project.
Phillips 66 reported a net loss of $141 million in Q2, compared with a $1.4 billion profit in the year-ago period.
The company said it operated its chemical segment at 103% utilization and recorded record polyethylene sales volumes.
Single-use plastics demand seen strong amid pandemic
CEO Greg Garland said polyethylene prices have risen in the US, Europe and Asia, in part because of a rebound in crude prices on top of strong demand for consumer plastics amid the global coronavirus pandemic.
"The consumer part is doing really well," he said. "The durables is still challenging, but improving, so think automotive and others."
Consumer plastics include single-use items made with polyethylene like grocery bags, milk jugs, shampoo bottles and diapers. Durables include plastics in vehicles, appliances and other items used longer term.
Garland said consumer markets are seeing two top trends, hygiene and "nesting," or consumers who are buying more products for in-home use.
"They're cooking more. They're using more disposables. They're using more trash bags. They're buying more bottled water that's wrapped in plastic," he said.
In addition, consumers are buying more kayaks and coolers for outside activities as well as home improvement products packaged in plastics, both of which boost demand for high density PE.
"I think we're constructive on the demand side. And I would say strong demand, weak to improving margins, and that's what we're running into," Garland said.