BASF has decided to put plans for a 475,000 t/y US methane-to propylene plant in Freeport, Texas, on ice for now, citing volatile commodity prices. Managing board member Wayne T. Smith said, however, the world’s largest chemical producer will continue to regularly review the development of raw materials prices “to determine the right point in time to commence such a major investment.”

The formal decision to postpone the project had been widely expected, as the narrowing gap between oil and natural gas in the US in particular has eroded the profitability of some chemical plants. Oil prices at present are down more than 50% against their 2014 peak.

Speaking at the German chemical giant’s annual results press conference at the end of February this year, BASF’s CEO, Kurt Bock, said the plant that would be the group’s largest single investment to date did not make financial sense “at present.”

When announcing the plans in early 2015, Bock said the facility was expected to “considerably improve” the group’s cost position and backward integration in the US.

According to reports, petrochemical projects worth nearly $50 billion have been announced in Texas over the past decade in the wake of the shale gas boom, but the economics of a number of them are now increasingly being questioned. 

Dow Chemical recently started up a similar plant, while a joint venture of Enterprise Product Partners and Formosa Plastics Corp plans to start its own facility within two years, and LyondellBasell and Exxon Mobil Corp also have announced construction plans.