French energy major Total, SA (NYSE: TOT – $50.40) said it is entering into a partnership with Austria’s Borealis and Calgary-based Nova Chemicals to form a joint venture with the aim of building an ethane steam cracker and a new polyethylene unit on the US Gulf Coast. Total is expected to hold a 50% interest in the new joint venture. The project will include: Building a new 1 metric ton/year ethane steam cracker in Port Arthur, Texas; Total’s existing 400 thousand metric tons/year (kt/y) polyethylene plant in Bayport, Texas; and building a new 625 kt/y Borstar polyethylene plant using Borealis’ technology on the Bayport site. The joint venture is expected to be established in late 2017, pending regulatory approvals along with the final investment decision on the Borstar polyethylene plant. The $1.7 billion new cracker is scheduled to start-up in 2020 and will create around 1,500 jobs during peak engineering and construction activity. According to the company, by leveraging synergies with its existing world-class integrated platform in Texas, Total was able to optimize capital expenditures and deliver one of the most competitive cracker projects in the US.
Total has adapted well to low oil prices, thanks to its integrated model with sizable exploration, midstream and downstream operations and its chemical businesses. Shares of TOT boast worthwhile investment attributes, such as solid capital gains potential over the 3- to 5-year stretch along with a current 5.3% dividend yield that is about double the market average.