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Chevron Phillips reportedly in $15bn bid for Nova Chemicals
NORTH AMERICA
CHEVRON Phillips Chemical, a joint venture between Chevron and Phillips 66, has report- edly o ered to acquire Nova Chemicals for over $15bn including debt, Reuters said on June 20, citing sources familiar with the matter.
Calgary-headquartered Nova is owned by Abu Dhabi’s sovereign wealth fund, Mubadala Investment, and manufactures plastics. Mubadala has been exploring the possibility of selling the company since the start of the year, and the sources said there was no certainty that it would accept the o er from Chevron Phil- lips. In addition, another bidder could emerge, or Mubadala could decide to keep a stake in Nova.
Nova had earnings before interest, taxes, depreciation and amortisation (EBITDA) of $271mn in the rst quarter of 2019, down from $418mn a year earlier, according to its website.
e bid was welcomed as a potential indica- tion that international majors could return to Alberta.
“Nova’s been spending a lot of money lately, but none of it in Canada other than the Sarnia plant so it might mean we’ve seen the multina- tionals exit Alberta on the oil sand side,” said IHS’ executive director of natural gas liquids, Bill Rawlusyk. “It means a multinational with big pockets coming back to Alberta, which would be a good thing in my opinion.”
And the acquisition would mark a change of direction for Chevron, which has recently offloaded some of its Canadian assets. This includes the sale of its 57,000 barrel per day Burnaby refinery in British Columbia to
Parkland Fuel in 2017 on the downstream side. e super-major remains active in the oil sands though, with a 20% stake in the Athabasca Oil Sands Project, which operated by Canadian Natural Resources Ltd. (CNRL). It also has a 60% operating interest in the Ells River heavy oil leases, and it is also one of the more active oper- ators in the Duvernay shale play.
If a deal is struck, Chevron Phillips would become the third-largest producer of polyeth- ylene in North America and the third-biggest producer of high-density polyethylene (HDPE).
“Such a deal would confirm the trend of Big Oil diversifying further into downstream, viewing the petrochemical sector as a growth engine and a means for margin security,” Wood Mackenzie’s chemicals principal analyst, Ashish Chitalia, said. “However, [Chevron Phillips] and Nova Chemicals also complement in terms of products, including polyethylene and polysty- rene, geographic footprint and technology. With up to 1.5mn tonnes of merchant ethylene avail- able to [Chevron Phillips] post-Nova Chemicals acquisition, the company would be in a strong position to leverage the second expansion wave on the Gulf Coast.”
None of the companies involved have con- rmed the reported bid as yet.
In the meantime, Nova is proceeding with a CAD2bn ($1.5bn) expansion at its Sarnia poly- ethylene plant in Ontario that is expected to be completed this year. e broader Canadian pet- rochemical industry is also rebounding, buoyed by the abundance of cheap natural gas that can be used as feedstock.™
Nova is proceeding with a CAD2bn ($1.5bn) expansion at its Sarnia polyethylene plant in Ontario.
If a deal is struck, Chevron Phillips would become the third-largest producer of polyethylene in North America.
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w w w . N E W S B A S E . c o m Week 25 27•June•2019