10 January 2011 17:48 [Source: ICIS news]
By Nigel Davis
INEOS wants to secure the future of its two refineries at Grangemouth in
INEOS Refining is a $15bn (€12bn) turnover operation which produces close to 20m tonnes of fuels from 410,000 bbl/day of crude oil. The assets need continual investment but it is the exposure that INEOS, as a chemicals producer, has to crude price and refining margin volatility that have been difficult for the company to bear. It takes time to lose money in petrochemicals but not in refining.
Grangemouth needs some spending to process heavier crudes but it is also a ‘strategic asset’ as far as the UK and Scotland is concerned, providing much of Scotland’s gasoline and the utilities that keep an essential gas pipeline link with producing fields in the North Sea operational.
The crackers at Grangemouth too need re-vamping but that, perhaps, is another story.
A deal with PetroChina - expected to be a 50:50 joint venture - will help INEOS further pay down debt and please its banks.
Strategically, it will help the company maintain these two vitally important refineries and a lot of the infrastructure that underpins its petrochemicals and polyolefins operations. It will reduce exposure.
The second part of the deal for INEOS is the agreement with PetroChina’s parent, China National Petroleum Corporation (CNPC) to “share refining and petrochemical technology and expertise”.
Strategically, INEOS is probably most pleased with this aspect of the agreement, signed with some ceremony in front of Chinese Vice Premier Li Ke Qiang and British Deputy Prime Minister, Nick Clegg, in
INEOS undoubtedly wants a stronger foothold in
The refinery joint venture is likely to take until the end of June to put into place now that the serious talking has begun, ICIS was told on Monday. INEOS director Tom Crotty was very pleased. “This is very much the start of much closer cooperation,” he said.
Crotty has said before that INEOS, being a company with assets in Europe and North America, wants to expand in intermediates in Asia and the
One of the world’s largest chemicals producers, it can build on its technology and expertise, particularly in these increasingly important, and in the case of
PetroChina and CNPC, after some 18 months of negotiation, have a way to go before securing a major presence in European refining, but they are also negotiating the wherewithal to help develop a much stronger chemicals future.
($1 = €0.78)
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