Lyondell Petrochemical Co. has outlined a venture that would allow increased runs of heavy crude oil at its 265,000 b/cd Houston refinery.
Preliminary plans call for Lyondell, Houston, to ally with subsidiaries of Venezuela's Petroleos de Venezuela SA to upgrade heavy crude processing capabilities of the refinery and obtain supplies of heavy crude feedstock.
Lyondell proposes to form a jointly owned company with Pdvsa's Citgo Petroleum Corp. subsidiary to take over ownership of the Houston plant.
Upgrades would not significantly change the plant's crude capacity but would allow the refinery to process as much as 200,000 b/d of heavy crude feedstock, up from 120,000 b/d at present. Following completion of the upgrade, Citgo could increase its interest to 50%, with Lyondell retaining remaining venture interest.
Upgrade design and engineering are to begin immediately, with regulatory permitting and construction expected to be complete in 3-4 years.
WHO WOULD DO WHAT
Citgo would receive a significant minority interest in the Houston refinery and venture by contributing most of the money needed for a $500 million expansion of the plant's coking, hydrotreating, and sulfur removal capacities.
The joint venture would lock in a secure supply of heavy oil through a long term contract with Lagoven SA, another Pdvsa subsidiary. Lagoven is to begin delivering heavy oil immediately and increase volumes based on the refinery's processing capabilities.
In addition, Citgo would buy refined products produced by the joint venture. The plant currently produces gasoline, jet fuel, heating oil, aromatics, and a variety of lubricants.
Bob G. Gower, Lyondell president and chief executive officer, said the venture would stabilize refining cash flow and earnings, boosting the latter as the upgrade is completed.
Creation of the venture is subject to negotiation and execution of definitive legal agreements, resolution of other matters, and approval by the boards of directors of parties to the deal. A management committee including representatives of Lyondell and Citgo is expected to direct the venture.
Current employees of the Houston plant are expected to become employees of the joint venture with full credit for service to Lyondell.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
