Air Products and Chemicals Inc.‘s (APD) joint venture with Technip − a world leader in project management, engineering and construction for the oil & gas industry − in Sichuan , China has recently bagged a contract from PetroChina Company Limited (PTR), the world’s largest oil and gas company.
Air Products will construct a hydrogen production facility with an output of about 90 million standard cubic feet per day that is scheduled to start operations in 2012. The facility will produce hydrogen through the new steam methane reformer, which will support PetroChina’s new refinery and ethylene complex in Sichuan , China. Air Products stated that the steam methane reformer would reduce the loss of heat to the environment, which in turn will minimize the quantity of natural gas required to make hydrogen.
According to Air Products, this is the first time that state-owned PetroChina has outsourced its hydrogen requirements. Last year, Air Products entered into similar agreements with PetroChina to build an air separation unit to provide oxygen and nitrogen and produce liquid products for merchant gas customers in China. The air separation unit is expected to start in 2011.
Air Products and Chemicals, an industrial gas producer, is benefiting from long-term take-or-pay contracts, a consolidated industry structure, a diverse customer base and sustained pricing power. We are encouraged by Air Products’ new contract wins across the industrial gas space in the recent months, reflecting a robust growth momentum across the emerging economies in Asia, where the company has a strong presence.
We maintain our Neutral recommendation on Air Products.
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