14 November 2011 00:00 [Source: ICB]
The Spanish company has an ambitious strategy to increase capacities and for inorganic expansion
Capacity for normal paraffin and PET will grow at San Roque
Acquisitions will help expand the company's core areas of linear alkyl benzene (LAB), purified isophthalic acid (PIA), phenol and polyethylene terephthalate (PET) while a debottlenecking program will keep the company's facilities in the top 25% in terms of production capacity and energy efficiency, according to its CEO, Fernando Iturrieta.
He said the expansion strategy for CEPSA petrochemicals division includes plans to boost its LAB market share by an acquisition in Asia or the Middle East.
"We would like a second site for purified isophthalic acid (PIA) in the Middle East or Asia," he said. "It could be an acquisition or investment in a site. In phenol, we would like to buy a competitor either in Europe or Asia.
"We have had some preliminary discussions, especially in phenol. We would like to close a phenol acquisition by the end of 2012," he said.
For the phenol investment, CEPSA Quimica is looking at a nine-figure euro price. It has its sights on two or three candidates that include worldscale plants, Iturrieta said.
Asked about the actual price of the acquisition, he said: "Phenol has been in good shape the past couple of years but now the environment is not so positive, so the price will be lower, for sure. We may eventually buy another PET plant in Europe; that could happen next year."
The company also wants to add natural feedstock technology to its surfactants production. Iturrieta said: "We are in LAB and derivatives but the other technology is alcohols, ethoxylates and derivatives - this is what we are missing. These are mostly natural alcohols and there is pressure to use natural rather than petrochemical products."
He said feedstocks for the alcohols and ethoxylates business are mostly in southeast Asia, although they could be brought to Europe for processing. "We are looking at all options, including Latin America," he said. "If this is an acquisition, it could be as early as next year, but new project construction will take two to three years."
He said: "Having both parts of the surfactants portfolio will make us stronger. We can only supply our main customers, such as [household and personal care groups] P&G, Unilever and Henkel with one part of their requirements."
Asked why CEPSA Quimica is going ahead with debottlenecking projects in its production sites, Iturrieta said: "We want to strengthen our sites. If they are not competitive they will be lost. We need a limited number of sites big enough to compete with the Middle East and Asia, where they are building huge PET and LAB plants."
Iturrieta said CEPSA's investments will save €115m ($158m) in the next five years in improvements in efficiency and energy savings. Investment will be around €100m, he said. Engineering is taking place now and construction should start in 2012, with completion due by the end of 2013.
At San Roque, Spain, normal paraffin capacity will grow from 400,000 tonnes/year to 450,000 tonnes/year, while PET production will rise from 175,000 tonnes/year to 220,000 tonnes/year.
At Salvador de Bahia, in Brazil, LAB capacity will be boosted from 220,000 tonnes/year to 260,000 tonnes/year and sulphonic acid capacity will be increased from 80,000 tonnes/year to 120,000 tonnes/year.
At the plant in Montreal, Canada, purified terephthalic acid (PTA) capacity will go up from 600,000 tonnes/year to between 650,000 and 700,000 tonnes/year.
In October, CEPSA Quimica laid the foundation stone for a $200m (€145m) project to produce 250,000 tonnes/year of phenol and 150,000 tonnes/year of acetone in Shanghai, China. Start-up is scheduled for the end of 2013. The plant will consume cumene as a feedstock so approval from local authorities is being sought for the construction of a 330,000 tonne/year cumene plant next to the phenol/acetone site. Iturrieta said this project would cost €50m-60m. "We hope to start construction of the cumene plant in 2012 with completion in mid-2014," Iturrieta said.
To further boost cumene capacity, 200,000 tonnes/year of capacity is being added at the company's site at Huelva, Spain, bringing total capacity to 1m tonnes/year."
CEPSA is now 100% owned by Abu Dhabi's International Petroleum Investment Company (IPIC), which boosted its share from 47% in August 2011. According to Iturrieta, there could be opportunities to integrate with IPIC's other chemical investments at Austrian-headquartered Borealis. "There could be synergies with Borealis' Finland phenol business," he said. "Also, IPIC has plans to invest in its ChemaWEyaat complex so we could help market products or build plants."
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