What’s next for PetroChina and Ineos?

Business, China, Company Strategy, Europe, M&A, Projects

By Malini Hariharan

After months of talks, PetroChina finally signed a framework agreement with Ineos for partnerships in refining, trading and petrochemicals at Grangemouth in Scotland and Lavera in France. The companies will be working towards the formation of these ventures by end-June 2011.

PetroChina’s parent China National Petroleum Corp (CNPC) and Ineos also signed an agreement to share refining and petrochemical technology and expertise.

petrochina.jpg
Pic Source: www.businessinsider.com

For Ineos, Europe’s largest independent refiner the deal to partner with one of the world’s largest refiner makes a great deal of sense.

It not only secures the future of the two sites but also gives the company an entry into China’s lucrative petrochemicals market.

Ineos director Tom Crotty said the agreement to give Ineos the opportunity to lever its polyolefins, polyvinyl chloride (PVC), chlorine, possibly acrylonitirile (ACN) and other technologies into China.

But beyond sharing of technologies, what Ineos should be looking at is a cracker joint venture in China. This has been difficult task for most foreign companies except those that can offer oil. But the planned joint venture with PetroChina gives Ineos a good platform to pursue a cracker and deriviatives project.

Ineos currently has only one project in the country – a phenol and acetone joint venture with Sinopec at Nanjing.

Financially, Ineos will be pleased as a cash injection by PetroChina would help it in its deleveraging efforts. “We are not talking small numbers here,” said Crotty in this interview.

As for PetroChina, a deal with Inoes is much more than gaining a foothold in Europe. It would help PetroChina hedge against uncertain product pricing policies in China where the government is working hard to tame inflation, says one analyst in this report. A second pointed out that with a share in a refinery in major trading areas, PetroChina would have a secure supply of oil products and storage capacity for its expanding trading operations.

After expanding in Asia (a stake in Singapore Refining Co and a joint venture with JX Nippon Oil in Japan) and Europe, speculation has mounted that the company will soon turn its attention to the US to achieve its ambition of becoming an integrated international energy company.

And PetroChina has deep pockets – its chairman has said that the company plans to spend $60bn in overseas acquisitions.

But it remains to be seen if the PetroChina can to make a smooth entry into the US as the last effort by a Chinese company (CNOOC’s bid for Unocal) to acquire a refining asset was scuttled by political pressure.

PREVIOUS POST

NEW EO-Derivative Investments Planned For Singapore

10/01/2011

By Malini Hariharan After months of talks, PetroChina finally signed a framework...

Learn more
NEXT POST

Saudi Petchems Blighted By Logistics

12/01/2011

By Malini Hariharan After months of talks, PetroChina finally signed a framework...

Learn more
More posts
Environmental credits separate polymer Winners and Losers as the world divides
14/06/2019

By John Richardson THE WORLD is becoming a much more complex and fragmented place as the consensus a...

Read
Trade War: 88m tonnes of lost polymers demand despite the boom in Asia ex-China
12/06/2019

By John Richardson SURE, there are tremendous opportunities for petrochemicals and polymers companie...

Read
Trade war certainties: A bi-polar world and the overwhelming importance of Chinese demand
10/06/2019

By John Richardson THE IRONY IS that if the US trade deficit with China shrinks because of the trade...

Read
China PP demand growth still heading for seven-year low despite surge in imports
07/06/2019

By John Richardson ALL is not suddenly right with China’s polypropylene (PP) demand despite our re...

Read
Symptoms worsen for Dr Benzene and China economy as trade war accelerates
06/06/2019

By John Richardson THE ABOVE chart is again telling us something very important about the real state...

Read
China PE spreads at seven-year low indicates too many eggs in one basket
04/06/2019

By John Richardson CHINA polyethylene (PE) spreads over naphtha feedstock costs are at a seven-year ...

Read
Vietnam PE demand booms on trade war, but for how much longer?
31/05/2019

By John Richardson GLOBAL manufacturing supply chains are adjusting to the US tariffs against China,...

Read
China trade war self-reliance push threatens ethylene glycols and PP imports
29/05/2019

By John Richardson CHINA WILL do what suits China and not what suits the rest of the petrochemicals ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more