Lukoil Neftochim unlikely to restart Burgas EO/MEG unit in ‘09

27 August 2009 15:00  [Source: ICIS news]

LONDON (ICIS news)--Bulgaria’s Lukoil Neftochim is unlikely to restart its ethylene oxide (EO)/monoethylene glycol (MEG) unit at Burgas in 2009 due to poor market conditions, a source close to the company said on Thursday.

“I don’t foresee [them running] for the rest of this year, but nothing is confirmed,” the source said.

Another MEG player said it did not believe rumours that Lukoil would never actually restart, adding that it could ramp up in the fourth quarter.

A decision on whether or not some units would restart would be made in the second half of September, once upstream developments and requirements were made clearer, according to recent reports from the company.

The plant at Burgas – which has the capacity to produce 80,000 tonnes/year of EO, 100,000 tonnes/year of MEG and 10,000 tonnes/year of ethanolamines, according to the ICIS plants and projects database – went down at the end of June.

This was followed by the closure of the rest of the petrochemical and polymer complex, the source said.

There was a very small amount of MEG available for the local market and surrounding areas in July.

Stocks have effectively now run out and regular consumers have had to look elsewhere for material, industry players said.

MEG prices have risen from the low-to-mid €500s/tonne ($714/tonne) CIF (cost, insurance and freight) NWE (northwest Europe) to over €600/tonne in the space of a week, largely because of a lack of availability.

The recent €80/tonne increase in feedstock ethylene (C2), to €875/tonne, would give support for the higher costs of downstream products.

“If ethylene is up now, this will probably help them to balance the MEG prices,” a customer said, adding that this could mean the plant would restart sooner rather than later.

EO prices moved up in August by €10-20/tonne to €920-950/tonne FD (free delivered) NWE and €950-980/tonne FD Mediterranean.

This was mainly driven by firmer feedstock costs and buoyant-to-improving demand, particularly in the surfactants sector.

Ethanolamine spot prices were last assessed at €1,030-1,070/tonne FD NWE for monoethanolamine (MEA), €990-1,050/tonne FD NWE for diethanolamine (DEA) and €1,200-1,300/tonne FD NWE for triethanolamine (TEA) 99%, according to global chemical market intelligence service ICIS pricing.

($1 = €0.70)

Jane Massingham and Heidi Finch contributed to this story

For more on EO and MEG visit ICIS chemical intelligence
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By: Caroline Howard
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