NewsFlashINEOS shelves Wilhelmshaven cracker

18 September 2007 18:23  [Source: ICIS news]

INEOS waves goodbye to Wilhelmshaven schemeLONDON (ICIS news)--Sky-rocketing capital costs have forced INEOS to suspend work on its planned ethane cracker at Wilhelmshaven in Germany, the petrochemicals giant said on Tuesday.

The cracker would have been the first new ethylene plant to have been built in Europe for many years.

Capital costs for the project had risen by more than 30% in the past 12 months alone, making the project in its current form economically unviable, INEOS said.

The decision to suspend the project was taken after discussions with the project partners Statoil and E.ON Ruhrgas, it added.

INEOS said the project could not be achieved “at any cost” without giving details. Previous reports had put the cost of the project at more than €1bn ($1.4bn). 

“The decision that has been made recognises the significant impact of higher capital costs on the viability of this particular project,” it said in a statement.

“This is clearly disappointing for INEOS, the City of Wilhelmshaven and the State of Lower Saxony,” INEOS chairman Jim Ratcliffe said.

Considerable resources had been devoted to the project since original agreements were made in August 2005, which INEOS did not quanitfy.

A gas separation unit was to be constructed by Statoil and E.ON Ruhrgas in Dornum, Germany, taking gas from the Norwegian sector of the North Sea. Separated ethane was then to be piped to Wilhelmshaven and cracked.

INEOS planned to invest further in the chlor-alkali facilities at Wilhelmshaven, which were originally owned by ICI, including the construction of a new membrane chlorine cell room and upgrades to vinyl chloride monomer (VCM) and suspension polyvinyl chloride (sPVC) plants.

An ethylene pipeline was also to be built linking the plant to the ARG ethylene pipeline in North Rhine-Westphalia.

INEOS said it remained committed to the growth of all its core businesses and to expansion in Germany but the company was not available for comment on the future of the chlor-alkali investments.

INEOS currently is awaiting approval from the European Commission for its planned close-to-$1bn purchase of the former Norsk Hydro petrocehmical business Kerling in Norway.

It recently completed its purchase of the 50% it did not own of its Scandinavian cracker and polyolefins joint venture with Borealis.

Its decision not to go ahead with the Wilhelmshaven project brings to an end speculation over the possible construction of the first new cracker in Europe for more many years.

Ethylene producers have, however, been lifting ethylene production capacity at existing plants sharply in 2007 to meet expanding demand.

European ethylene demand is growing at a small multiple of gross domestic product.

BASF is adding a further 280,000 tonnes of capacity at its cracker in Antwerp, Belgium to raise total ethylene capacity at the site to 1.08m tonnes a year.

INEOS was due to add 100,000 tonnes of capacity at its production site at Cologne in Germany, and other producers had 2007 expansion projects either completed or in hand.

($1 = €0.72)

By: Nigel Davis
+44 20 8652 3214

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