Nova expands on joint ventures in styrenics, ethane

Alberta-based Nova Chemicals Corporation has announced its plans to expand an existing joint venture with European petrochemicals manufacturer INEOS. Under the proposed agreement, the 50/50 joint venture will include Nova Chemicals’ STYRENIX unit and other styrenic polymer assets.

The STYRENIX unit includes Nova’s North American styrene and solid polystyrene assets, and the company’s interest in the existing European joint venture. INEOS will contribute its North American styrene and polystyrene assets in addition to its interest in the joint venture.Nova also said that the venture would include solid polystyrene-based NAS, ZYLAR and DYLARK polymers from the company and the AVANTRA specialty products by INEOS.

“We expect the expanded JV to add value for our shareholders and we will continue to look for further consolidation opportunities,” said Nova president and CEO Jeffrey Lipton in a released statement.

Nova’s Olefins/Polyolefins business unit reported a US$379 million net income in 2006. Conversely, the Performance Styrenics unit recorded a US$29 million net loss, and the STYRENIX business unit reported a US$152 million net loss for 2006.

The venture is expected to have revenues of about US$3.5 billion a year. Nova CFO Larry MacDonald also told a manufacturing and materials conference yesterday that the company anticipates initial savings of more than US$40 million.

The expanded venture with INEOS was the second joint venture for Nova this week. The petrochemical firm also signed a letter of intent with Aux Sable Canada Ltd. earlier this week to develop an ethane extraction plant in Fort Saskatchewan, Alta. The new plant, which would be operated by ASC and process natural gas from the Alliance Pipeline, is expected to be operational in 2010.

The plant is expected to produce approximately 40,000 barrels of ethane per day, and the compound will then delivered to Nova’s petrochemical complex in Joffre, Alta. through a pipeline.

“Maintaining and extending the Alberta Advantage for production of ethylene is fundamental to the long-term viability of the petrochemical industry in the province,” said Nova’s Lipton.Nova was also at the centre of speculation this week after the Business Standard, an Indian business daily, reported that the company was in advanced talks with Reliance Industries Ltd. (RIL) to form a joint venture.

Citing sources close to the development, the newspaper reported that the Indian petrochemical company had made presentations to Nova, and that an alliance agreement could be inked in the near future. RIL has also been linked to the Dow Chemical Company in recent weeks.

When reached by Canadian Plastics, Nova spokesperson Greg Wilkinson said that the company is often the subject of speculation. He declined to comment on media reports of negotiations with the Indian company.