BP Amoco plans $5.2bn chems spend by end 2001

15 July 1999 18:37  [Source: ICIS news]

LONDON (CNI)--BP Amoco said Thursday it plans to invest some $5.2bn (Euro5.1bn) in its chemicals activities over the three years to end-2001.

This represents 20% of the $26bn it expects to invest across its global business over the three year period.

Announcing new three-year targets for the merged group, chief executive John Browne said chemicals investments will be concentrated on "ideal sites", such as Grangemouth, Scotland and Texas City, US, where BP Amoco's competitive advantage as an integrated company can be exploited.

"Our aim is to add value to our own hydrocarbons primarily through the production of aromatics and olefins - each of which amount to around 35% of our total chemical production. 'Ideal sites' such as Grangemouth allow us to integrate our activities with our own hydrocarbon base, and therefore to minimise the production of lower value by-products," he told journalists.

"Creating a limited network of manufacturing sites, many integrated with upstream and downstream assets, will help us to reduce fixed and variable costs per tonne. In total we expect unit costs [in chemicals] to fall by 25% over the three year period to the end of 2001," Browne said.

He added that BP Amoco would concentrate on high growth products such as polypropylene (PP) and purified terephthalic acid (PTA).

Bryan Sanderson, chief executive for chemicals, said other possible "ideal sites" include Lavera in France, Hull in England and Jinshan in China.

He declined to identify which of BP Amoco's chemicals assets might be included in the group's planned $2.5bn chemicals sell-off. But he revealed the split between former BP and former Amoco assets will be roughly 50:50, with slightly more assets coming from Amoco. Group-wide, BP Amoco is planning some $10bn worth of disposals over the three year period, with an approximately 50:50 split between BP and Amoco.

Browne said the integration of BP and Amoco into a single company is now essentially complete. Job cuts resulting from the merger now stand at about 8000, and the number is likely to exceed 10 000 in the future, he said.

By: Anna Williams
+44 208 652 3214

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