09 June 2006 11:05 [Source: ICIS news]
LONDON (ICIS news)--Sabic Europe said on Friday it has decided to put the expansion of its Geleen, Netherlands cracker on hold.
"The investment costs and financial risks are too high to realise a financially sound project on the Geleen site today," Sabic Europe said in a statement.
“The main cause for the high investment costs is the current overstrained market situation in the global contracting and construction market due to the many investment projects in the oil, gas and energy market worldwide," said Frans Noteborn, Sabic Europe chief executive.
Known as EurOPE 1, the project was designed to add about 1m tonnes/year of naphtha cracking capacity at Geleen. It was due to yield an additional 400,000 tonnes/year of ethylene and 620,000 tonnes/year of propylene plus 200,000 tonnes of benzene and 310,000 tonnes of ethyl tertiary butyl ether (ETBE).
Sabic's plans also included a 400,000 tonnes/year propylene co-polymer unit, a 400,000 tonnes/year ldPE plant at Geleen and a 250,000 tonnes bimodal hdPE plant at Gelsenkirchen, Germany.Total cost of the project had been put at around €1.5bn ($1.9bn) and Sabic had been working closely with contractors and equipment suppliers in a bid to avert excessive cost esclation.
Sabic group chief executive officer Mohamed Al-Mady said earlier this year that any new plants were becoming more difficult to justify due to increased capital expenditure required by the scarcity of contractors and higher construction costs.
He said then that the project could be brought onstream in 2010 if the go-ahead was given this year.
Sabic Europe said in its statement today that it remained committed to its strategy of growth for the important European market.
"To realise this strategy, all options such as the upgrading of the current asset base and supply from the global Sabic system to strengthen the existing portfolio will be reviewed in the coming months."
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