Chemical Update

Pfizer and University of California, San Francisco have launched a collaboration that spans many disciplines, several UC campuses and multiple Pfizer research units. The three year agreement, with research and other support up to $9.5 million, establishes a university team to help identify promising areas of mutual interest and facilitate project management. The innovative effort already has templates in place to allow swift industry-university agreements.

The Pfizer- University of California, San Francisco (UCSF) agreement will encourage collaborations between the company and UCSF's unit of QB3, the multi-campus California Institute for Quantitative Biosciences, headquartered at UCSF.

The effort will be managed by QB3. All interested UCSF scientists will be eligible to participate, as will scientists at QB3's two sister university campuses - UC Berkeley and UC Santa Cruz.

AVANTech Awarded Multiple Water Treatment Plants

AVANTech, Inc. has received a purchase order for delivery of two complete water treatment systems in support of the Engro Chemicals plant expansion project in Dharki, Pakistan. The first water treatment system consists of two 100 percent trains of two-pass reverse osmosis system, sized for 352 gpm permeate at 85 percent recovery. Ancillary equipment includes chemical injection systems, multimedia depth, bag, and cartridge filtration and a Clean-In-Place Skid.

AVANTech will also be providing three 100 percent trains containing two-bed reverse-flow ion exchange systems of equivalent size, including associated regeneration and neutralization facilities. All equipment is skid mounted, pre-piped and pre-wired with all of the associated valves, piping, instrumentation, pumps, and related components integrated prior to delivery.

Eastman Announces Changes In Ownership Of Industrial Gasification Projects

Eastman Announces Changes in Ownership Of Industrial Gasification Projects

Eastman Chemical Company recently announced the acquisition of Green Rock Energy LLC's 50 percent ownership interest in the Beaumont, Texas, industrial gasification project. With this acquisition, Eastman becomes the 100 percent owner of the Beaumont industrial gasification project and remains the sole developer. In addition, Eastman announced the divestiture to Green Rock of its 25 percent ownership interest in the St. James Parish, LA, industrial gasification project and will no longer participate in the project. Terms of the transactions were not disclosed.

Eastman expects to complete the front-end engineering and design for the Beaumont gasification facility in the second half of 2008, and to obtain non-recourse project financing by year end 2008. The construction phase is expected to create between 1,300 and 1,500 jobs, with approximately 250 permanent U.S. based jobs expected to result from the project.

stman Chemical Focus on Coal

Eastman Chemical Focus on Coal

Eastman Chemical Co. is focusing on coal as "a low-cost solid hydrocarbon with investment potential," says Brian Ferguson, the company's chairman and CEO. He calls coal the most abundant and secure energy source, noting that less than 1 percent of coal comes from countries in unrest. He also added labor costs are China's key advantage. However, some studies have reported that wages in coastal China are rising about 9 percent to 10 percent /yr. He said that with 20 percent to 25 percent of Eastman's products made from coal, the company's strategy is to reduce imports through gasification and carbon capture. Safely removing sulfur and mercury in the process can limit environmental concerns. Also, with hydrogen as a byproduct, refiners that need hydrogen to process heavy oils can be supplied, Ferguson said.

INTERNATIONAL

Dow's MABS Technology Selected By LiaoNing HuaJin Chemical

Dow Technology Licensing, a business unit of The Dow Chemical Company, announced recently that LiaoNing HuaJin Chemical has selected Dow's MABS Technology for its new 140 KTA acrylonitrile butadiene styrene (ABS) facility. Due on stream in 2011, the plant will be constructed in LiaoNing Province, The People's Republic of China. LiaoNing HuaJin Chemical is the 10th Chinese chemical manufacturer to select one of Dow's technologies in the past two years.

In contrast to traditional batch-to-batch emulsion ABS processes, Dow's MABS Technology - a continuous mass solution process (mass-ABS) - produces a high purity resin and enables greater lot-to-lot consistency. By minimizing impurities, the resulting product has a ‘whiter' base, which is easier for formulators to color customize.

China consumes five times more ABS than the U.S. and by 2012, ABS demand in China is projected to grow to 4,300 KTA - the equivalent of more than half of current global ABS production capacity.

ABS resin is a tough, heat and chemical resistant thermoplastic that is easily processed into light, rigid products such as piping, appliances and toys. ABS resins are increasingly being combined with polycarbonate resins to ‘upgrade' heat and flow product performance to improve manufacturing productivity and cost efficiency.

ovartis to Purchase Majority Stake in Nestlé's Alcon Eye Care Unit

Novartis to Purchase Majority Stake in Nestlé's Alcon Eye Care Unit

Novartis and Nestlé have signed a deal through which Novartis will buy just less than 25 percent of Nestlé's Alcon eye care business and have the option to purchase another 52 percent by 2011. When completed, the deal between the Swiss companies will total $39 billion.

Optical Fix, Alcon's AcrySof intraocular lens, can be used to surgically correct for cataracts and presbyopia. Alcon makes and sells pharmaceutical, surgical, and consumer eye care products. In 2007, it derived $1.6 billion in net income from sales of $5.6 billion, of which about 40 percent were in the pharmaceutical area.

The companies have structured the deal in two steps to accommodate the desires of Nestlé. Novartis will pay $11 billion for an initial stake in Alcon in the second half of 2008. Between January 2010 and July 2011, Novartis has the exclusive right to purchase another 52 percent at a fixed price and eventually own 77 percent; minority shareholders will own the remaining 23 percent of the company.

During a conference call with Novartis executives, financial analysts questioned the rationale behind the deal. Although the Alcon business is profitable and has been growing at double-digit rates, the two-step deal will not allow Novartis to realize any cost savings in the short term as a minority shareholder. The company may also not realize any long-term benefits unless it buys out the minority shareholders. Meanwhile, the company is taking on about $5.5 billion in debt to finance the deal.

Regulators must still approve the deal.

Dow Europe and Gujarat Alkalies and Chemicals Ltd. Sign Joint Venture Agreement

Dow Europe GmbH (Dow), and Gujarat Alkalies and Chemicals Ltd (GACL), a company promoted by Government of Gujarat, announced recently the signing of a Joint Venture Agreement (JVA) for the construction, operation and ownership of a 200 kilotons per year chloromethanes manufacturing facility in Gujarat, India. The agreement allows Dow and GACL to complete a study, begin work on definitive agreements and work towards financial closure which is estimated to be completed by late 2008. Estimated to be operational in 2011, the new production unit would be located at Dahej, Gujarat on the western coast of India. The parties will form a 50:50 joint venture company to manage local permitting processes.

“Being here in India, and understanding the growth prospects for both our companies, as well as this region, is very exciting. This is yet another example of our commitment to meeting the needs of our customers through establishing joint ventures with strategic partners, using an asset-light investment approach,” said Michael R. Gambrell, executive vice president, Basic Chemicals and Plastics for Dow. “As GACL – India’s largest chlor-alkali producer, and Dow - the world’s largest producer of chemicals and plastics and the world's largest supplier of chlorinated organic products and services, form a joint venture company and enter into negotiation of the definitive agreements for this project, we do so against the all-important backdrop of sustainability.”

“The new investment through this Joint Venture between Gujarat Alkalies and Chemicals Ltd. (GACL) and Dow Europe GmbH is a significant development. This will give a push to the down stream users in the pharmaceuticals, paints and grease removal, refrigerant and solvent sector by making raw materials available at more competitive rates and bringing valuable Forex to the country,” said Shri Saurabhbhai Patel, Minister Of State for Energy & Petrochemicals, Government Of Gujarat.

Chloromethanes are used as an intermediate in the production of fluorocarbons and fluoropolymers, and as a solvent in pharmaceutical manufacturing, metal cleaning/degreasing, and other chemical processing applications. GACL will supply feedstock and power and lease land to the joint venture, while Dow will license its production technology and marketing and sales expertise. The joint venture will market its products primarily to countries who are members of the South Asian Association for Regional Cooperation (SAARC).

Dowpharma Sells its U.K. Operations to India's Dr. Reddy's

Dowpharma says it will sell its small-molecule active pharmaceutical ingredient (API) assets in Cambridge and Mirfield, England, to Dr. Reddy's Laboratories, an Indian generic drug company that also runs a custom manufacturing business.

Dow says the divestiture is part of a company-wide portfolio review and will not affect its API assets in Midland, Mich., or its Pfenex Pseudomonas-based protein expression technology business. Dr. Reddy's will obtain a nonexclusive license to Pfenex as part of the agreement.

"The businesses are doing well, but they are not a strategic fit for the way Dow is run now," says a company spokesman, noting that their process technology differs from that used in Midland and that raw materials are more expensive in Europe. Dow acquired the U.K. facilities with its purchase of Ascot's Chirotech Technology and Mitchell Cotts fine chemicals operations in 2001.

Dr. Reddy's, which purchased an API plant in Mexico from Roche in 2005, is on a campaign to build a global custom manufacturing operation. "The proprietary chiral and biocatalysis technology at the Cambridge site and the scale-up capability in the Mirfield site will add significant value to the company," Managing Director Satish Reddy says.

DSM Composite Resins Plans Large Investment to Increase Capacity

DSM Composite Resins AG (Schaffhausen, Switzerland) has embarked upon an extensive engineering study that could lead to a large expansion to its manufacturing facilities in Compiègne, France. The company is increasing its focus on innovation and specialty products. If the plant expansion gets the go-ahead from the engineering study, the capacity will be expanded by up to 20,000 tonnes per year, particularly for specialty products.

Global trends towards products with lower weight and better mechanical properties that reduce environmental impact are driving the composites industry to manufacture these specialty products. The plant expansion will increase output of specialty products, such as DSM’s new Turane resins.

The goal is to produce specialty resins that will accommodate market growth, both in existing applications like automotive and in innovative applications like windmill blades and municipal sewer systems relining.

The expansion of production capacity for vinyl esters and the new generation of vinyl ester hybrids (like Turane) are the result of DSM’s drive for innovation – offering the industry new specialty products that lead to higher performance and durability.

In the initial engineering study the company will conduct additional research, planning and create detailed estimates of final expenditure. Contact with local authorities is ongoing to ensure proper integration of this project in the region where the Compiègne Site is located. After final approval – which is expected in the fourth quarter of 2008 – the expansion will be completed by late 2009 or early 2010.

Ashland, Sud-Chemie Create Chemical Venture

Ashland, the chemicals company, has signed a memorandum of understanding to form a global specialty chemical joint venture with Sud-Chemie, which will serve foundries and the metal casting industry especially in Europe, the Americas and Asia. The businesses to be combined in the joint venture had sales of around $1.1 billion in 2007 and employ 1,300 people.

In a press statement on its web site, Ashland’ chairman and chief executive officer, James J. O’Brien, says the rapid industrialization of markets such as China, Eastern Europe and India create strong growth opportunities for the metal casting industry. Expected to be operational in early 2009, the new enterprise will combine three businesses: Casting Solutions business group of Covington, KY - based Ashland, the foundry-related businesses of Munich-based Süd-Chemie, and Ashland-Südchemie-Kernfest joint venture in Hilden, Germany.

Octal Petrochemicals to Add 500,000 tpa of PET Capacity

Octal Petrochemicals will add 500,000 metric tons of production capacity in PET resins by May 2010, making it one of the world's largest polyester producers with 800,000 metric tons of annual capacity.

Octal Chairman Sheikh Saad Suhail Bahwan said the company's second-phase expansion will make it the largest polyester manufacturer in the Middle East and one of the biggest outside of China on one site.

The new complex is located in the Salalah Free Trade Zone in Oman.

Octal's integrated PET resin and APET sheet facility in the southeast city of Salalah will ramp up the new production capacity in two stages: 250,000 metric tons by March 2010 and the remaining 250,000 by May of that year. The company is targeting the soft drink and bottled water markets in Europe, the US and Middle East through its move into PET.

Sheikh Saad said, 'Between 2009 and 2012 more than 20 million metric tons of plastic raw materials capacity will come on-stream in the Gulf. Octal is harnessing the region's strategic advantage and Salalah's unique location to deliver major growth in PET resin production for export as well as significant cost savings through our integrated, one-site operational model.'

Sheikh Saad said, 'Octal is fulfilling its expansion strategy to become a homegrown global petrochemicals leader. Phase one saw our entry into APET sheet for global export. Phase two will be a major step forward in PET resin production, and phase three will complete the integration of our state-of-the-art facility, realizing unprecedented cost and quality advantages.'

Speaking at the Oman Economic Forum in Muscat today, Octal Managing Director Nicholas Barakat said, 'Preliminary funding for phase two is already in place. Around $18m has been allocated for long-lead items and engineering work.'

Fluor Corporation has been retained as technical advisor for the expansion and is preparing bid packages for the construction. BankMuscat will continue to serve as financial advisor.

Mag Fouad, Vice President of Technology at Fluor, said, 'Octal is progressing towards the goal set at its outset in 2005 to become the largest and lowest-cost polyester company in the Middle East, a region where the key raw materials for PET are readily available.'

Octal's phase-one facility is nearing completion and will produce 150,000 metric tons per annum (tpa) of PET by the end of 2008. By that time, the plant's total combined production capacity of PET and APET sheet will have reached 330,000 tpa.

Nicholas Barakat of Octal said: 'The infrastructure for the second phase, thanks to the Ministry of Commerce and Industry and Salalah Free Zone, is now ready. The first MEG tank of the liquid chemicals terminal is complete, water treatment facilities are in place, and we have secured the environmental permits for the capacity increase.'

Based at Salalah Free Zone, Octal Petrochemicals' integrated PET (polyethylene terephthalate) and APET (amorphous polyethylene terephthalate) production plant is being built at an initial cost of $300m.

Total investment on the site is set to rise to as much as $1bn upon completion. Global export sales capacity is expected to reach $500m by the end of this year and net exports will reach $1.1bn with the completion of phase three.

Xinjiang Firm Expands Calcium Carbide Factory

The Xinjiang Zhongtai Chemical Company Limited (Urumqi City, Xinjiang Autonomous Region) began a project in Fukang City's calcium carbide production base in order to double its capacity. The 200,000-ton-per-annum factory is based on Zhongtai's existing production lines with the same capacity.

Zhongtai President Wang Hongxin said the factory will use a closed 30,000-kilovolt-ampere calcium carbide oven. The factory, expected to be complete by December, will provide materials to Zhongtai's $1.5 billion Chemical Industrial Park, which is under construction in Urumqi's Midong District.

Zhongtai also has other plans to expand its business. By 2010, Zhongtai expects to be producing more than 1 million tons of PVC resin and ion-exchange-membrane caustic soda, with demand for calcium carbide exceeding 1.5 million tons per year.

Zhongtai is also adopting an environment-friendly development plan. The products and factories will be integrated into a chain in which wasted energy and materials are recycled throughout the production process, Wang said.

Zhongtai's plan includes a 5 million-ton-per-annum coal mine in Xinjiang's Huaidong area. A 2006 report said the area has 68.5 billion tons of coal deposit, making it one of China's largest coal mines.

ExxonMobil's $1.8 Billion Chemical Investments Focus on Asia in 2008

ExxonMobil's (NYSE:XOM) investments into the chemical industry in 2008 are expected to reach $1.8 billion, almost double the amount last year. The majority of this investment will go toward expanding the company's assets and joint-venture enterprises in Asia.

Although ExxonMobil will continue feasibility studies of its projects in Saudi Arabia and Qatar, it will speed up its confirmed projects in China and Singapore. The investments will raise the company's steam cracking capacity in Asia and the Middle East by 60% in the next few years.

One of the company's key chemical projects in Asia is its Jurong Island project in Singapore. This project will maintain ExxonMobil's advantage in meeting the rapidly increasing demand for chemical products in Asia, especially in China. The company's investment in Singapore includes a 1 million-ton-per-annum ethylene cracking unit. This unit has the highest raw material flexibility among all ethylene cracking units that the company owns. Based on the cost of raw materials, this unit can switch from using ethane to heavy oil material. The Jurong Island project also hosts production capacities for polyethylene, polypropylene, specialty elastomer, pure benzene and carboxide alcohol. The project will start production in early 2011.

ExxonMobil's joint-venture enterprise with Fujian Petrochemical and Saudi's Aramco in Quanzhou is building its refining and petrochemical integrated facilities at full speed. Its production date is slated for 2009.

An evaluation of the company's joint venture with Saudi Basic Industries (SABIC) in Jubayl and Yanbu is still in being conducted. The expansion will include specialty rubber and plastic. The expected production date of these projects is 2011.

In Qatar, ExxonMobil and Qatar Petroleum are planning to build ethane cracking facilities with an annual ethylene capacity of 1.3 million tons. Its downstream products will include linear low-density polyethylene, low-density polyethylene and glycol. These facilities are expected to be completed by 2012.

The company's chemical business made $4.6 billion in profit in 2007. Its specialty product business made $1.2 billion, and its olefin and aromatic hydrocarbon business generated $3.4 billion in profit.

China BlueChemical

China BlueChemical Begins Construction on 3,000-Ton Polypropylene Carbonate Plastic Project

China National Offshore Oil Corporation (CNOOC) (Beijing) recently announced that its subsidiary CNOOC China BlueChemical Limited has begun construction on a polypropylene carbonate (PPC) plastic project at the company's chemical industry park in Dongfang City of Hainan Province. The use of PPC plastic will alleviate "white pollution" and lessen the consumption of oil and gas used in making traditional plastic. The $21.5 million project's designed annual production capacity is 3,000 tons of degradable plastic. The world's largest existing facility of this kind has a capacity of 1,000 tons per year.

The main raw material used in the project will be waste carbon dioxide and propylene oxide. Copolymerization of carbon dioxide and propylene oxide produces the carbon dioxide multipolymer PPC, a new biodegradable and environmentally friendly product with high value. It degrades to water and carbon dioxide. PPC plastic is highly transparent, highly oxygen proof and has good bio-compatibility. PPC can be used in a variety of plastic products. It can substitute many non-biodegradable products used in the medical, food and agricultural industries.

Formosa to Opt Out of Ningbo Project in Mainland China

Formosa Plastic Group (FPG), subsidiary of Formosa Petrochemical Corporation (FPCC), has decided to relinquish plans to participate in a mega ethylene project in Beilun Petrochemical Zone of Ningbo City. The complex had been planned with an annual crude oil refining capacity of 10 mln tons and ethylene capacity of 1.2 mln tons, just like FPG's existing complex in Mailiao offshore industrial zone.

With the opening up of direct cross-strait shipment, FPG will be able to transport its petrochemical products from Mailiao to China and therefore may not have to implement its mega ethylene project in Ningbo, China.

China National Petrochemical Corporation (CNPC) is expected to take over this project.

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