BUDAPEST (ICIS)--Europe petrochemicals capacity will remain largely static and are likely to partially consolidate as the region continues to lose ground against other regions, according to the CTO of Germany-headquartered producer BASF.
New large-scale petrochemicals capacity investment is likely to remain limited as producers seek opportunities in more resource-competitive regions such as North America, according to BASF CTO Martin Brudermueller.
“Petchems capacities in Europe will remain static and partly consolidate, [and] only very limited new capacities will come onstream,” Brudermueller said, speaking at the 50th annual European Petrochemicals Association (EPCA) meeting in Budapest, Hungary.
The fall in oil prices since mid-2014 has reduced pressure on European producers in the short term, Brudermueller said, but investment decisions are made on a longer timeframe, and studies at present point to an increase in oil prices from their current levels.
This makes the case for large-scale capacity investment in Europe more difficult to make, he added.
Europe’s key challenges include high energy prices and no major raw material resources compared to shale gas in North America, oil and gas reserves in the Middle East and coal in China.
Technological innovation, world-scale plants, strong production and supply chain integration, and a global presence are vital to the continued profitability of European producers, Brudermueller added.
Companies can drive competitiveness for European operations through increased feedstock flexibility, particularly through imports of liquefied petroleum gas (LPG), he said.
In 2010, 74% of Europe’s cracker feedstock mix was naphtha, compared to 64% in 2015, while the proportion of propane and butane rose from 14% to 23% over the same period, according to Brudermueller.
The proportion of ethane usage in Europe’s cracker feedstock mix shifted from 8% to 9% over the period.
“We will increasingly see raw material flexibility in other regions… mak[ing] regions regions more independent from imports, Brudermueller said. “It is important to understand and execute all technologies to execute on best raw material mix.”
“That flexibility will be critical to the long-term competitiveness of not just Europe but the rest of the world,” agreed LyondellBasell CEO Bob Patel, also speaking at EPCA.
“We don’t know what the relative price of oil and gas will be in the future,” he added.
The EPCA meeting runs 1-4 October.