EPCA ’15: Integration a key concern for European petchem players

BERLIN (ICIS)–Europe’s petrochemical players are focused on how they can continue to drive costs down, consolidate, perhaps, and survive in an increasingly competitive market environment.

Integration is a watchword for sector producers, as reflected in the views of European Petrochemical Association vice presidents published ahead of the EPCA’s 49th annual meeting.

The most integrated of Total’s refineries petrochemical production sites are the most robust and competitive said Olivier Greiner, vice president of marketing and sales for base chemicals at Total Refining & Chemicals.

The integration between refineries and steam crackers at Total has a significant impact on the break-even point of both sets of assets.

“In the long run we remain convinced that there is a good future for efficient petrochemical players in Europe,” Greiner said. “They will have access to a variety of feedstocks, be flexible, reliable and integrated with refining assets and downstream users. Access to logistical infrastructure will be a critical success factor.”

Because Total is less integrated downstream (it makes polyethylene, polypropylene and polystyrene) the company can be more flexible in the feedstocks it cracks. The ability to be able to switch between feedstocks such as naphtha, liquefied petroleum gases (LPGs), ethane and refinery off-gases, is seen as essential by some producers.

But others are in a different position and need to be more flexible in other ways.

“I think that well-positioned players with the right strategy can thrive in a high energy and feedstock cost environment [such as Europe],” said Rainer Diercks, president, petrochemicals, at BASF.

Europe has its challenges for a petrochemical player, including high feedstock and energy costs and little room for additional petrochemicals production volume growth. But the sector is profitable and more stable than some observers suggest, Diercks said.

ICIS believes the reference scenario for cracker operators in Europe is that ethylene demand growth will contract as slow derivatives growth is met by imports.

BASF relies on the integration at its Verbund sites to minimise logistics costs, energy consumption and waste water. It aims for technology leadership, continuous asset optimisation and operational excellence, Diercks added.

“The petrochemical industry in Europe will certainly not grow rapidly, but it nevertheless remains the foundation of the European industry and will also in the future allow for profitable business.”

The full version of this article was published in ICIS Chemical Business in a special feature prepared for the 49th EPCA Annual Meeting 2015. It can be seen by clicking here.

For more information and articles from ICIS at EPCA 2015 click here.

The annual EPCA meeting runs from 3-7 October.