Europe propylene pipeline firm readies subsidy bids for EC

16 September 2003 13:43  [Source: ICIS news]

GELEEN, Netherlands (CNI)--Final submissions of data in support of subsidies for a Euro180m ($203.4m) propylene pipeline project in the Benelux-Ruhr area of northwest Europe will be submitted to the European Commission's (EC) competition directorate by the end of September, it was disclosed here Tuesday.

Bas Kostering, olefins and styrene marketing director for Sabic EuroPetrochemicals - one of eight chemical companies backing the project - said that if applications for subsidies totalling Euro46m won EC approval under the simplified procedure then the first phase could be operational in mid-2005.

This initial phase, to partly use existing pipelines, would link Gelsenkirchen, Germany, where Sabic EPC has one of its two European production sites, with other chemical complexes at Marl and Oberhausen in Germany. The rest of the approximately 360 km long network would be ready by late 2006. These sections would link Antwerp and Rotterdam with chemicals facilities at Geel and Berengen in Belgium, Geleen (where Sabic has its other European manufacturing site) and the German plants at Wesseling, Knapsack, Lovenich and Worringen.

Sabic and its seven partners in the European Pipeline Development Co (EPDC) believe the 1m-1.5m tonne/year capacity project is vital if major chemical companies in Belgium, Netherlands and Germany are to avert a propylene supply shortfall estimated at about 1.55m tonne/year by 2006. The Gelsenkirchen area alone is expected to have a propylene shortfall of 885 000 tonne/year from 2006.

Subsidies totalling Euro37m in Germany, Euro5m in Belgium and Euro4m in Netherlands are being sought for the project, leaving the eight chemical company backers to find a total of Euro143m.

Kostering, an ardent believer in the project, said that the Euro143m cost would be split equally among the EPDC backers, which in addition to Sabic are DSM, Shell, BASF, Celanese, BP/VORP, Degussa/Rutgers and Sasol.

However, he said that EPDC would be expected by the EC to open the project to other partners. Kostering added that marine terminal operators at Rotterdam and Antwerp - where additional supplies could be imported - were likely to seek participation in the project.

Engineering studies on the proposed network are almost complete and Kostering said he was very optimistic that Brussels would give it the green light.

Kostering would not be drawn on the likely tariff structures for using the line. However, he stressed that among the main benefits to chemical company participants would be the impact on petrochemical production economics from security and flexibility of propylene supply.

By: Neil Sinclair
+44 20 8652 3214

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