BP Amoco to exit phthalic anhydride, phthalates markets

07 June 2000 16:10  [Source: ICIS news]

LONDON (CNI)--BP Amoco Chemicals is to withdraw from the phthalic anhydride (PA) and phthalate plasticiser markets, and will progressively close its production facilities at Hull in northeast England.

It said Wednesday that production of diethyl phthalate (DEP), dimethyl phthalate (DMP) and linear phthalates will cease at the end of this year. Dioctyl phthalate (DOC) production will stop early in 2001 and PA output will halt during the second quarter next year.

BP Amoco said its decision to quit the PA and phthalates business was the result of a strategic review and the "poor current and projected financial performance of the business".

It told CNI that the production units will be dismantled after production ceases and the approximately 50 people employed in the business redeployed or offered voluntary redundancy. "There are no plans for enforced redundancies," said a spokesman.

It is understood that BP Amoco decided to close and dismantle its approximately 80 000 tonne/year PA facility after failing to agree terms with any of the few potential buyers to have expressed an interest.

BP Amoco said in a statement that as part of the exit its linear phthalates business will be sold to Lonza of Italy. It said Lonza will acquire the portfolio on 1 July and market the linear phthalate output from Hull for the remainder of 2000. When production at Hull ceases, Lonza will manufacture linear phthalates at its San Giovanni, Italy plant.

Financial details of the transaction were not disclosed, although it is understood that the sum involved is relatively small. Lonza is effectively buying BP Amoco's customer list - thought to number around 50 including distributors - plus some technology and knowhow.

No estimate was available of the cost to BP Amoco of closing its PA and phthalates operations. The decision follows a detailed assessment by BP Amoco of its chemicals operations. It announced last year plans to dispose of chemicals assets worth $2.5bn and cut petrochemical costs by $400m/year as part of a $10bn asset disposal programme.

BP Amoco's move today, which it said was announced early to facilitate a smooth transition for customers to alternative suppliers, is just the latest in a growing list of consolidations and retrenchments in the European PA and plasticisers business.

Last month, German chemicals and life sciences giant BASF confirmed it is in negotiations to buy Italian group Sisas' PA, maleic anhydride (MA), plasticisers plus butanediol (BDO) and derivatives activities at Feluy and Ostend in Belgium.

BP Amoco was reported in February by CNI's sister publication European Chemical News to have been in negotiations with BASF, among others, for the Hull PA business. BASF was believed to have pulled out of negotiations because it considered the asking price too high.

By: Neil Sinclair
+44 20 8652 3214

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