InterviewEurope can compete with Mideast if regulation rational

27 September 2010 21:04  [Source: ICIS news]

LONDON (ICIS)--The European chemical sector can compete against the Middle East provided the regulatory environment does not damage it, a Shell Chemicals executive said on Monday.

Ben van Beurden, executive vice president of chemicals, told ICIS the European sector’s superior product slate and highly efficient clusters meant it could survive in the face of competition from Middle East and US ethane-based producers.

“Europe will get its strength from well-integrated clusters producing a higher grade of petrochemicals than typically comes out of the Middle East. These clusters have been developed over the years to make a lot of economic and logistical sense,” he said.

Regulation could be a real threat to the industry’s survival, he claimed, adding that he believed the EU’s carbon trading scheme - the Emissions Trading System (ETS) - was a major concern.

“The threats from within [Europe] are of a similar if not a higher magnitude [than external threats],” he said. “We can come up with a very workable solution to the ETS. The system we’re working on based on benchmarking can work and make the industry a very vibrant and relevant one.”

Under the ETS, there are proposals to offer the top 10% of most efficient chemical producers a partial or total free allocation of carbon credits to cover their emissions.

Meanwhile, owners of less well-performing assets would be forced to pay for credits.

Van Beurden said he was confident that Shell would meet the November 2010 deadline for the registration of substances under Europe’s Reach chemicals legislation.

“We are right in the ramp up period for Reach and are about 75% complete in terms of registrations,” he said. “I’m confident we’ll be done well ahead of the deadline. How it works in 2011 remains to be seen. There will be a tremendous volume of material for the European Chemicals Agency [to deal with].”

The agency is the body responsible for implementing Reach.

Van Beurden said Shell had already been through the major part of its restructuring programme in Europe and the US, and was now focused on investing in its mature economy operations.

“From a Shell standpoint, we try to be at the top end in terms of competitiveness,” he said. “We may still need to shut down some small bits and pieces of capacity in the same way we look at adding it. The heartlands are important centres of profitability which need to be maintained through investment.”

For more on Shell visit ICIS company intelligence
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By: Will Beacham
+44 20 8652 3214

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