INSIGHT: Total sees refinery/petchems integration lifting availability

25 September 2012 18:26  [Source: ICIS news]

By Nigel Davis

Total petrochemical plant in Antwerp, BelgiumLONDON (ICIS)--Oil and energy major Total wants to spend less time on new refining and chemicals projects and more on reliability, said its refining and chemicals division president, Patrick Pouyanne.

Plant availability had slipped to around 90% from earlier levels, he told analysts at a group investor day, but the drive since the realignment of refining and chemicals has been very much to get back to basics.

In October 2011, Total said it would create a refining and chemicals division as a production hub as well as a division to market petroleum products.

The new refining and chemicals alignment would concentrate all the company’s refining and chemical operations, including speciality chemicals and fertilizers, it said, and, according to CEO Christophe de Margerie, give production and marketing a clearer vision of what had to be done in mature as well as growth markets.

The French oil giant is trying to get more from much closer integration between refining and chemicals and by running its largest production platforms more efficiently. Clearly, it wants to grow in developing markets and in important regions such as the Middle East.

But it wants to make the most of what it has in its six largest refining and petrochemical production platforms, which represented about 62% of the capital employed in the division in 2011 but are expected to represent 72% by 2017.

Less emphasis will be placed on smaller sites in Europe and North America. The cash flow from the major platforms is expected to double between 2011 and 2017.

“The ongoing restructuring of refining & chemicals is expected to provide an additional $650m [€500m] per year of net results by 2015 through improved efficiencies and synergies,” Total said. It expects to sell assets worth between $15bn and $20bn between 2012 and 2014.

The company will not be drawn on what type of assets it might sell but it appears keen to hang on to its remaining specialty chemical operations, which include Hutchinson, Bostik and Atotech.

In petrochemicals, the focus is clearly on the Middle East and Korea and on assets linked to the larger refinery/petrochemical complexes in Europe.

The refining and chemicals strategy, however, will see the asset footprint change.

Total says it is currently the number one refiner in Europe and number two in petrochemicals. It is among the top 10 global producers of polyethylene (PE), polypropylene (PP) and polystyrene (PS).

But it is focusing its capital spending in Europe on two sites: Antwerp, in Belgium and Normandy in France. And it intends to keep driving its exposure to the European market down – by close to 20% over the next five years as it has over the past five years.

By 2017 about 35% of the company’s capital employed in refining and chemicals will be in Asia.

As far as petrochemicals are concerned, the company continues to try to adapt its asset footprint to the changing market. That does not only mean lowering the break-even point for its plants and aiming to lift reliability. It has also meant plant closures and some polyolefins investment.

Operations are being reconfigured at Carling and Gonfeville in France while there have been some capacity increases at Feluy in Belgium, La Porte in France and in the US at Port Arthur in Texas.

An investment of €1.25bn ($1.6bn) at the Total refinery and petrochemical complex in Antwerp (€250m on the cracker) will make refinery off-gases available as a cracker feed starting next year.

Total’s major petrochemical projects, however, are in the Middle East. The company is building one of the world’s largest paraxylene (PX) units at Jubail in Saudi Arabia, integrated with its joint venture refinery with Saudi Aramco, where it will also produce benzene and propylene.

The Jubail projects are on-schedule for completion in the third quarter of 2013 and the venture will be the first in the Kingdom to produce PX and petroleum coke.

The project is expected to produce 700,000 tonnes/year of PX, 140,000 tonnes/year of benzene and 200,000 tonnes/year of polymer-grade propylene.

In Qatar Total is looking at expanding its joint venture cracker and raising PE capacities.

Investment at its Daesan complex in South Korea, which it owns with Samsung, will see capacities double as a condensate splitter and an aromatics complex are added to the largely petrochemical complex.

The petrochemical investments at the joint venture include the construction of a second aromatics unit to produce 1m tonnes of PX and 420,000 tonnes of benzene. There is a project to construct a 240,000 tonne/year ethylene vinyl acetate (EVA) copolymer facility.

The $1.8bn investment at the complex will lift output of products to a total of close to 10m tonnes/year including jet fuel and diesel.

($1 = €0.77)

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By: Nigel Davis
+44 20 8652 3214

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