Motiva Enterprises LLC is acquiring a materials production site from Flint Hills Resources Port Arthur LLC for an undisclosed price.
Motiva is a unit of global energy giant Saudi Arabian Oil Co., known as Saudi Aramco.
The site in Port Arthur, Texas, includes production of plastics feedstocks ethylene, propylene and cyclohexane. Officials said in an 19 Aug news release that the acquisition is set to close in the fourth quarter of 2019. Flint Hills retains its other operations.
"This marks the entry of Motiva into the chemical industry," Patrick Kirby, Wood Mackenzie Principal Analyst, said in an emailed statement.
"The steam cracker, which can handle a range of feedstocks — including ethane and those form the refinery — forms an integral part of the transaction. The steam cracker primarily produces ethylene and propylene for the merchant market.
"It remains unclear as to what Motiva has planned post-acquisition, however some options could include strengthening refinery-chemicals integration, expansion of the asset capacity or potentially longer-term derivative plant development. The company has also expressed plans for further chemical developments at Port Arthur, including a world-scale steam cracker and aromatics facility," Kirby said.
Houston-based Motiva already operates a refinery in Port Arthur. The firm formed in 1998 as a joint venture between Saudi Aramco of Riyadh and Royal Dutch Shell plc of London. Aramco bought out Shell's part of the JV in 2017.
State-owned Saudi Aramco is one of the world's largest petrochemical companies, with 2018 sales of almost $356bn (€320bn). The firm has been active on the acquisitions front this year. Earlier this month, it announced plans to invest $15bn (€13.5bn) to acquire a 20% stake in a Reliance Industries Ltd. unit that includes one of the world's largest polypropylene businesses
In March, Aramco paid a little more than $69bn (€61bn) for a 70% stake in global commodity and engineering resins supplier Saudi Basic Industries Corp. Saudi Aramco also has partnered with Dow Inc. on the Sadara plastics and petrochemicals joint venture in Saudi Arabia.
Flint Hills is owned by industrial conglomerate Koch Industries Inc. The firm's other petrochemical products include PP resin, which it makes at a plant in Longview, Texas.