I've been writing a lot recently about the feedstock disadvantage naphtha-based European chemical producers have over Middle East and US ethane consumers. In the long term this could have a severe impact on chemical production here.
So the news that INEOS is going to build a 1m tonne/year ethylene terminal at Zwijndrecht, Belgium, raises some interesting possibilities. INEOS could chose to import cheap ethylene from the Middle East and close some European capacity. It has been mulling the future of its smaller, G4 cracker at Grangemouth, Scotland, for some time.
Importing and processing ethylene will not help with the impending structural shortage of propylene, however, caused by greater cracking of ethane and lower refining rates. Cracker economics is a complicated business.
Market sources suggest the new terminal will cost E80m-E100m to build. We at ICIS Chemical Business have been trying for an interview with INEOS since the announcement but they're being tight lipped.According to the press release: "Operation of the new deep-sea terminal, which is expected to start in 2012, will significantly change the shape of the ethylene market in Europe." "Shape" is an interesting word to use.
Once completed, the new INEOS Terminal will be connected directly to INEOS' ethylene consuming facilities in the Antwerp Rotterdam Area and into Europe via the ARG ethylene pipeline (formerly Aethylen-Rohrleitungs-Gesellschaft pipeline) linking Antwerp to Cologne and the Ruhr industrial areas.
"The INEOS Group is the largest consumer of ethylene in Europe and I am pleased to confirm this significant investment at our Antwerp facility," said Hans Casier CEO INEOS Oxide. "The new terminal secures the competitiveness of our site and underlines the importance of our production facilities in Antwerp, located at the heart of the largest Petrochemical area of Europe.
"Additionally by connecting INEOS Olefins & Polymers Europe and the INEOS Oligomers LAO/PAO facility in Belgium to the new terminal, INEOS will be able to efficiently balance its ethylene requirements over its facilities in Europe.
"It is also clear the new INEOS Ethylene Terminal will re-shape the ethylene market in Europe, opening up a new gateway to world markets", he concluded.