A solid base in Portuguese Petrochemicals

31 August 1998 00:00  [Source: ICB]

Two integrated petrochemical complexes make up the heart of the Portuguese petrochemical industry; the Estarreja petrochemical complex in the north and the Sines complex, located south of Lisbon and home to Portugal's only cracker, operated by Borealis.

Estarreja is headquarters to Companhia Industrial de Resinas sinté'ticas (Cires), Portugal's sole producer of suspension and emulsion grade polyvinyl chloride (PVC). Cires was formed in 1960, primarily to consume chlorine produced from neighbouring chlor-alkali producer Uniteca, also located on the Estarreja complex. The formation of Cires marked Europe's first industrial joint venture with Portuguese and Japanese financial participation. The company's major shareholders are the Japanese companies Mitsui and Shin-etsu, each with a 25% stake and the Norwegian energy group Norsk Hydro with 19.4%. The balance of the capital, around 30.6%, is listed on the Lisbon stock exchange.

Cires has grown rapidly from an initial production base of 3600 tonne/year of suspension resins to its current capacity of 160 000 tonne/year of PVC. A major investment programme currently under way aims to lift capacity to 180 000 tonne/year by 1999 and to 200 000 tonne/year thereafter. Cires' PVC production is based on technology licensed by its parent company Shin-etsu, a world leader in suspension PVC. Since 1993, when Cires inaugurated a new pipeline from the nearby Aveiro port, the company has relied entirely on imported vinyl chloride monomer (VCM) for its raw material supplies. Prior to installation of the pipeline, VCM was produced in-house.

Over recent years major investments have focussed on upgrading the Estarreja production facilities and have included the introduction of the new closed reactor technology. In parallel, Cires has developed its activities downstream through the acquisition of PVC processors located on the Iberian peninsula. Its subsidiaries Prevenil, situated in Alverca, Portugal, and CYGSA in Medavia, Spain, produce PVC compounds while Soplasnor, in Matosinhos, Portugal, manufactures PVC and polyethylene pipes and fittings for supply to the automotive industry and for use in sanitation units. However, the latter has plans to expand into other applications such as window profiles and frames for use in the civil construction sector. Altogether the Cires group registered a turnover of $135m in 1997, with the Iberian peninsula comprising the group's major market and exports to Europe and elsewhere accounting for around 25% of revenue.

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Also located on the Estarreja complex is Analina de Portugal, the Portuguese producer of aniline, nitrobenzene and nitric acid. The company is a major supplier of analine to Dow Portugal which has a 65 000 tonne/year MDI production facility on the site. Its raw materials, ammonia and benzene are supplied by Adubos de Portugal and Petrogal respectively, from a neighbouring site.

Analina de Portugal's activities date back to 1991. But it was only in 1997, following the privatisation of Quimigal, that the ownership of Analina de Portugal was transferred to Quimigeste, part of the Jose de Mello group, launching the company into the private sector.

Also in 1997, Analina de Portugal raised its capacity of nitrobenzene and aniline with the objective of bringing its plants up to world-scale dimension. Today, Analina de Portugal has capacity to produce 170 000 tonne/year of nitric acid, 160 000 tonne/year of nitrobenzene and 95 000 tonne/year of aniline. By 2000 it is intended to raise aniline capacity to125 000 tonne/year.

In parallel, Analina de Portugal has been actively diversifying into new products, in particular aniline and nitrobenzene derivatives. In line with this strategy the company will bring online a new plant producing sulfanilic acid in the fourth quarter of this year. The new plant will supply the textile, food and optical light industries. Analina de Portugal currently accounts for around 10% of western Europe's aniline production capacity of just over 1m tonne/year. Its major competitors in western Europe include BASF, Bayer, ICI and newcomer Dow. Its share of the world's 2.7m tonne/year production base is 3.7%.

In 1997, Analina de Portugal's total sales reached Escudo7.1bn, a 15% increase on the previous year. Around 60% of revenue was generated from sales to Dow Portugal. In fact six customers accounted for 92% of analine sales in 1997 while for nitrobenzene three customers generated 97% of the company's sales. Meanwhile, export sales totalled Escudo3bn and consisted mainly of nitrobenzene.

Around 90% of Anilina de Portugal's output is consumed in MDI, with a further 5% used in rubber production and 2% each in dyes and agricultural products. To put this in context, as much as 75% of the world's aniline production is consumed in MDI.

Also 100%-owned by the Jose de Mello Group is Portuguese company Uniteca with a history of over 40 years in the chloro-alkali production. Although its activities were initially linked to the production of textiles this sector was abandoned in 1985. Today Uniteca is headquartered in Porto while its production facilities are located in Estarreja.

The 1990s has represented a period of diversification for the company and today Uniteca heads a group of several companies: Quicom, Quimitécnica, Especialidades Químicas (EQ) and Sociedade de Explosivos Civis (SEC).

With a total chlorine production of 60 000 tonne/year the Uniteca claims to account for around 60% of Portuguese market share. It also has capacity to produce 134 000 tonne/year of sodium hydrochloride, 63 000 tonne/year of sodium hypochloride, 61 000 tonne/year of hydrochloric acid and 8900 tonne/year of sodium hydroxide. The company employs 250 people and boasts revenues in the region of $35m. Around 60-65% of the company's production capacity is based on mercury technology with the balance based on membrane cell technology.

Following the privatisation of Quimigal in 1997, it was agreed to merge both Analina de Portugal and Uniteca. Analina de Portugal acquired the share capital of Uniteca at the end of 1997 as well as the majority of Quimitécnica's share capital with the goal of consolidating a Portuguese group in the heavy chemical industry in Estarreja.

Estarreja 2000 envisages the consolidation of the Estarreja nucleus as a competitive centre in Europe and the world in producing polyurethanes and is being supported by the expansion of the logistical capacity of the Aveiro port. As well as increasing analine to 125 000 tonne/year, this would involve increments upstream in hydrogen and carbon monoxide production by Ar Líquido and downstream in the production of MDI by Dow Portugal and in the production of chlorine and caustic by Uniteca at the site.

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