Analysis: Appryl to change on BP Amoco merger?

14 August 1998 16:55  [Source: ICIS news]

LONDON (CNI)--The nature of BP's 49:51 Appryl polypropylene (PP) joint venture with Elf Atochem looks set to change when the chemicals businesses of BP and Amoco are combined in the $110bn merger of the two oil-to-chemicals groups.

As part of the new company, BP Amoco, BP will have "more importance when discussing the outcome (of the Appryl joint venture) with Elf Atochem", said one commentator contacted by CNI Friday. The result could be a 50:50 joint venture between BP Amoco and Atochem. Or Atochem could become the minority partner, although this would not fit "the French character to be leader", he added. An equal partnership, however, would not accurately reflect the PP capacity of BP Amoco.

It is estimated that BP Amoco will have around 13% of European PP capacity. Appryl produces PP at Lavera and Gonfreville-l'Orcher in France, and is building a plant at Grangemouth, Scotland, due onstream late in 1999. Earlier this year Appryl said the three sites would have a total capacity of over 700 000 tonne/year of PP in 2000. Amoco produces 490 000 tonne/year of PP at Geel in Belgium.

BP may decide to buy Atochem out of the Appryl joint venture, or BP Amoco might decide to divest the PP business altogether, said Renso Zwiars, DSM's business director for PP. But BP will need to solve this issue before it can merge with Amoco, he added.

David Oxley of US-based consultancy Chem Systems suggested BP might rather use Amoco's process rather than Appryl's - depending on how the construction of the Grangemouth PP plant is progressing. But according to Zwiars: "They are probably just a little bit too late for that."

Further questions posed by consultants contacted by CNI include: how will Amoco's olefins joint venture with Dow at Terneuzen fit with BP's existing chemicals business. And might BP's planned joint venture with Dow for Innovene be problematic because Dow might not want Innovene to go into Amoco's business. Paul Ray at Trichem Consultants said it is too early to speculate about how the two chemicals businesses will fit together. "There's an awful lot to be thought through," he added.

But generally, the two chemicals businesses are deemed to fit relatively well. Linking BP's PE technology with Amoco's PP technology will strengthen BP's licensing package, stated Oxley. Plus Amoco's knowledge of engineering plastics could help BP develop its aliphatic ketones technology, he said. BP is currently developing its Ketonex polyketones with partners Hydro Polymers, part of Norsk Hydro, US-based PVC producer Geon and General Electric Plastics (GEP).

By: Anna Williams
+44 208 652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly