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Nova is run by the UAE state-owned Mubadala Investment Co., while Chevron Phillips is headquartered in Texas with 31 facilities in the U.S., Singapore, Belgium, Saudi Arabia and Qatar.

Chevron has offloaded some of its Canadian assets, including the 57,000-bpd Burnaby refinery in British Colombia, to Parkland Fuel Corp. in 2017. It maintains a 20 per cent interest in the Athabasca Oil Sands Project, operated by Canadian Natural Resources; a 60 per cent operating interest in its Ells River heavy oil leases; and is investing in its shale resources in the Duvernay in west-central Alberta, apart from other oil and gas interests.

Chevron did not immediately respond to request for comment.

If the deal proceeds, Chevron Phillips will become the third-largest producer of polyethylene in North America, behind ExxonMobil Corp. and Dow Chemical Co. It will also become the largest producer of high-density polyethylene (HDPE) on the continent, ahead of LyondellBasell Industries N.V.

Another buyer may yet emerge for Nova, and Mubadala could also decide to keep a stake in Nova in any deal that arises, Reuters reported.

HDPEs are used in plastic water bottles, corrosion-resistant piping and plastic lumber. The global market for HDPEs is expected to hit US$85.19 billion this year.

“The Nova acquisition would increase ethylene merchant exposure for Chevron Phillips. After the recent ethylene capacity increase at Cedar Bayou, Tex., Chevron Phillips was exposed to 500 thousand tonnes of ethylene to the merchant market, while Nova, post its acquisition of Williams Geismar (a Lousiana cracker) is exposed to approximately one million tonnes of ethylene,” said Ashish Chitalia, Wood Mackenzie chemicals principal analyst. “Together, the companies would have ethylene volumes equivalent of a world-scale cracker size of 1.5 million tonnes.”