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BASF FINA Petrochemicals Celebrates Start of Construction of World's Largest Steam Cracker

PORT ARTHUR, TEXAS, November 12, 1998 -- BASF FINA Petrochemicals Limited Partnership and Southeast Texas community leaders today celebrated the start of construction of the world's largest liquids steam cracker and the economic development impact it will have on the Golden Triangle region.

BASF FINA Petrochemicals Limited Partnership is a venture between BASF Corporation (Mount Olive, N.J.) and FINA, Inc. (Plano, Texas). The limited partnership, in which BASF holds a 60 percent share and FINA holds a 40 percent share, was formed to manage the operations of the steam cracker project and related facilities. The total investment will be approximately $1 billion, with mechanical completion expected by the end of the year 2000.

The steam cracker is being built adjacent to FINA's Port Arthur refinery and will be operated by BASF on behalf of the partnership. FINA will retain sole ownership of its refinery, and will be responsible for the off-site facilities for the cracker, also on behalf of the partnership.

The cracker will convert naphtha and light hydrocarbons into mainly ethylene and propylene, which are key raw materials in the manufacture of plastics, fibers, solvents, paints and surfactants (surface-active agents). These products are used in various industries, including housing, construction, automotive, textile and clothing, beverage containers and cosmetics.

BASF FINA Petrochemicals awarded a lump sum, turnkey contract to ABB Lummus Global for engineering, procurement, and construction services. In turn, Lummus hired HB Zachry as general contractor.

Significant cost advantages for both companies

The steam cracker will be the largest single train olefins production facility in the world with a nameplate capacity of 1.83 billion pounds (830,000 metric tons) of ethylene and 1.9 billion pounds (860,000 metric tons) of propylene. The cracker will use a special technology for enhanced propylene production.

The partnership between BASF and FINA represents the best solution for both companies for three reasons: First, BASF and FINA achieve mutually beneficial ethylene and propylene production primarily for internal use. Second, both companies derive significant cost advantages from integrating the cracker with FINA's existing refinery. Third, the companies gain significant economies of scale, which make it an attractive and efficient investment.

The integration of the cracker into FINA's refinery will provide an opportunity to optimize refinery and cracker feedstocks, as well as byproduct streams. The partnership will take advantage of BASF's steam cracker operating experience and FINA's expertise in refining and acquiring hydrocarbon feedstocks.

"With its innovative design and the synergies that we derive from the cracker's integration into a refinery network, this project will provide us with significant cost advantages," said Carl A. Jennings, President of BASF Corporation's Chemicals Division.

"The cracker will be the heart of our integrated manufacturing strategy throughout North America and represents the largest investment BASF has ever made outside of Europe. It is of major importance to our company because it will ensure economically attractive, long-term product supplies of propylene, ethylene and other key precursors such as butadiene, benzene and toluene for our major integrated sites, including Freeport, Texas, and Geismar, Louisiana.

"We are very excited about this project because it will serve as a platform for future expansion in the NAFTA region, and we are especially delighted to work with such a strong and progressive partner as FINA," he added.

According to FINA, Inc. President and CEO Ron Haddock, building the state-of-the-art steam cracker facility at its Port Arthur Refinery plays a significant role in the company's long-range business plans. "This investment is of strategic importance to FINA because it will increase integration between our refining business and our premiere chemical businesses, while supplying raw materials to our world-scale derivative plants, where we produce styrene, polystyrene, polyethylene and polypropylene."

The project is a key step in differentiating FINA's refining business from the competition. FINA's Port Arthur facility, one of the nation's leaders in efficient production of fuel products, has a strategic focus to expand production of chemical feedstocks. "The opportunity to utilize our refining capacity to support a jointly-owned, steam cracking operation with an experienced and outstanding operating partner, like BASF, provides the basis for a very competitive manufacturing site," Haddock said.

Satisfies BASF's and FINA's increasing internal demand

The cracker's capacity is designed for mainly captive usage in both companies. For BASF, it will help satisfy additional propylene requirements that have nearly doubled as a result of recent oxo alcohol and acrylic acid expansions at the company's Freeport site.

In addition, the cracker will secure the supply of ethylene to produce ethylene oxide, styrene and other derivatives. BASF's manufacturing sites in Freeport and Geismar will be supplied via pipelines from the new cracker.

For FINA, besides providing an attractive outlet for materials produced at its refinery, the project will help ensure long-term security of raw material supply for its rapidly expanding plastics business with the world's largest steam cracker producing feedstocks for the world's largest singe-site styrene, polystyrene and polypropylene plants, as well as FINA's recently expanded polyethylene facility.

FINA's expanded polymer manufacturing facilities will increase the La Porte, Texas polypropylene capacity to 2.1 billion pounds per year, and the Bayport polyethylene plant in Pasadena, Texas to 850 million pounds per year.

Cracking long-chained hydrocarbon molecules

Steam cracking is a key petrochemical technology used to convert saturated hydrocarbons such as ethane, propane, naphtha blends or other feedstocks into olefins and aromatics, including ethylene, propylene, butadiene, benzene, and toluene. The term "steam cracking" describes the cracker technology. High temperature and dilution steam are used to break down long-chained hydrocarbon molecules into smaller components, primarily light olefins such as ethylene and propylene. The term "liquids cracker" refers to the feedstock, which is typically a blend of petroleum liquids as opposed to liquefied gases such as ethane and propane.

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