09 August 2010 00:00 [Source: ICB]
European suppliers along the ARG pipeline face a new threat from deep-sea imports
UK-headquartered INEOS Oxide is planning to build a deep-sea ethylene terminal at its Zwijndrecht site in the Netherlands, in a move it said will "significantly change the shape of the ethylene market in Europe."
The terminal will have a throughput of 1m tonnes/year and is expected to go into operation in 2012. It will connect directly to INEOS' ethylene-consuming facilities in the Antwerp-Rotterdam area and into Europe via the ARG (Aethylen-Rohrleitungs-Gesellschaft) ethylene pipeline linking Antwerp, Belgium, to Cologne and the Ruhr industrial area in Germany.
INEOS Oxide's CEO, Hans Casier, said: "The INEOS Group is the largest consumer of ethylene in Europe and I am pleased to confirm this significant investment at our Antwerp facility. The new terminal secures the competitiveness of our site and underlines the importance of our production facilities in Antwerp, located at the heart of the largest petrochemical area of Europe."
He continued: "Additionally, by connecting INEOS Olefins & Polymers Europe and the INEOS Oligomers linear and polyalpha olefins (LAO/PAO) facility in [Feluy] Belgium to the new terminal, INEOS will be able to efficiently balance its ethylene requirements over its facilities in Europe."
The announcement on July 27 triggered speculation about the future of its G4 cracker at Grangemouth in the UK. There had been news as long ago as late 2008 that employees were being consulted over its closure.
Some market players see INEOS' move as potentially damaging to Northwest Europe as it will give the company more capability to source cheaper material from outside Europe, such as the Middle East, which has been expanding its ethylene capacity significantly in recent years.
Paul Hodges of UK consultancy International eChem commented: "INEOS' move is a potential game-changer for plants situated along the ARG ethylene pipeline. It will be the first terminal owned by a company structurally short of ethylene. Once it opens in 2012, older, inefficient crackers along the ARG will effectively find themselves in competition with ethane-based Middle Eastern ethylene".
Until now, Hodges explained, it has been relatively difficult and expensive to import ethylene into Europe. There has also been a shortage of terminal space linked to the ARG pipeline and this latter constraint will now change.
Plans by INEOS to build its own ethane-based cracker at Wilhelmshaven, Germany, cracker were shelved in September 2007 as skyrocketing costs rendered the project unviable.
Observers believe the new terminal will involve a capital investment of at least €100m ($132m).
At the time of going to press, INEOS had not responded to requests for further information.
Additional reporting by Nel Weddle in London
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