MOSCOW (MRC) -- Westlake Chemical Corp., the US plastics maker controlled by the billionaire Chao family, has separated its ethylene assets into a tax-advantaged venture in which it plans to sell shares to the public, said Hydrocarbonprocessing.
The master-limited partnership (MLP) includes three US ethylene plants and a 200-mile (322-km) ethylene pipeline. Ethylene, the most common petrochemical, is used to make products from plastic bottles to autoparts and pipe.
Westlake is creating the chemical industry's first MLP after the Internal Revenue Service in October 2012 ruled that companies converting ethane and other natural gas liquids (NGL) into olefins like ethylene can classify themselves as such. The partnerships, common in the pipeline industry, generally do not pay income taxes at the corporate level.
Westlake will own 90% of the venture's operating company, leaving the remaining 10% as the MLP's sole revenue source, according to the filing. The unit will sell Westlake ethylene for making plastics at a 10 cent-per-gallon premium over production costs.
The move comes as earnings at US ethylene producers, from Westlake to Dow Chemical Co., are near record levels after a shale boom created plentiful and cheap supplies of NGL. That provides a cost advantage over producers in Asia and Europe, where oil-derived naphtha is the main feedstock.
As MRC informed before, Westlake Chemical held a dedication ceremony on Wednesday for its new chlor-alkali plant in Geismar, Louisiana. This new chlor-alkali plant has the capacity to produce 350,000 electrochemical units (ECU's) annually and utilizes state of the art membrane technology. The plant is adjacent to the existing vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) facilities at the Geismar complex and has added approximately 70 full-time positions at the site.
Westlake Chemical Corporation is a manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC resin and PVC building products including pipe and specialty components, windows and fence.