The Falkirk Herald, INEOS's local newspaper in Scotland, has had to wait a long time for its 'scoop' of June 2009 to be confirmed. It had reported then that INEOS was in talks with PetroChina about the future of the Grangemouth refinery.
As PetroChina noted at the time, "downstream business has a poor margin nowadays and talks can take a really long time". But now the two companies have confirmed they plan to establish a "partnership in new trading and refining joint ventures related to the refining operations in Grangemouth (Scotland) and Lavéra (France)".
They expect to establish the trading and refining JVs by the end of June. In addition, they have announced a strategic co-operation agreement to share refining and petrochemical technology. The aim, according to the companies is to "create a true strategic partnership", seemingly focused in 3 initial areas:
• Refining, based on the Grangemouth and Lavéra refineries
• Oil trading, presumably replacing the current arrangement with Morgan Stanley (whose investment arm are advising INEOS on the PetroChina deal).
• Acrylonitrile, where INEOS's technology will support China's plans for domestic investment
INEOS will receive a cash injection when the JVs are formed, which it says will be used to pay down some of its current €7bn debt.
The JVs will also enable it to make progress with what INEOS director Tom Crotty terms its "two big strategic objectives" - growing its geographic footprint outside the West, and leveraging its technology in China.