Building for the future

Ineos logo
Ineos logo

Record results, a new headquarters and unprecedented investment mark the start of a new era for one of the world’s largest chemical producers

Andy Brice

By Andy Brice, London

The unveiling of its new headquarters at the end of 2016 was hugely symbolic for INEOS.

Some six years after relocating to Switzerland, more favourable trading conditions saw one of Britain’s biggest manufacturers return to UK shores with renewed ambition and plenty of optimism.

The move came at the end of a landmark year for INEOS, the business announcing record profits and a flurry of projects and acquisitions across the globe. INEOS posted full-year 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) of €4.3bn, raised €1.4bn of new loans and refinanced €3bn of its existing debts, saving around €100m/year.

“These figures confirm that INEOS is doing better than ever,” says chairman Jim Ratcliffe. “All the businesses are performing well and our successful refinancing shows that the market is clearly recognising this fact.”

Despite the tough economic conditions, feedstock volatility and increased competition that has tested the industry these past few years, Ratcliffe and his team have still secured INEOS’s position among the elite – ranked within the top 10 chemical companies in the world.

The unveiling of the new headquarters in London, itself reflects the company’s renewed confidence – both in Europe and the UK, where it has announced a raft of new projects.

A lot has improved since the company was last resident, particularly with regards the current government’s commitment and support towards manufacturing, he says.

The UK has been a hive of activity for INEOS this past year, notably with the development of its oil and gas business in the North Sea, the successful integration of INOVYN and plans to break into the automotive sector. The relocation therefore seemed logical, he says.


“As an organisation we’re very focused on growth and can see lots of opportunities in this portfolio,” says Ratcliffe.

“Whilst INEOS is an Anglo-Swiss company, our new base in London reflects our British roots. The future for INEOS is very bright and much of this optimism comes from our UK based operations,” he adds. “We currently supply millions of British homes with gas, we have a growing trading and shipping business and our chlorvinyls business has doubled in size. We are also planning to extract shale gas in the north of England and to grow the newly revitalised Grangemouth site.”

Yet Ratcliffe insists none of this was possible without the company’s $1bn investment into its Dragon ships programme – a “virtual gas pipeline” to import large volumes of ethane and liquefied petroleum gas (LPG) from the US.

The groundwork was laid in 2012 when INEOS first decided to create the link between the UK and US. By March 2016 it had become a reality, with the first of eight purpose-built Dragon-class ships crossing the Atlantic to provide a steady flow of advantaged feedstock.

The success of what some thought impossible has indeed helped change the company’s fortunes, asserts director of corporate affairs, Tom Crotty.


“The Dragon ships certainly laid the foundations for all our renewed expansion and investment. They’ve been transformational for the business,” he says.

“When we launched the project almost five years ago, we couldn’t have anticipated that the price of oil would fall but for us it was a win-win situation. Some said the drop undermined the logic of our Dragon ships but that misses the fundamental point; if you’ve got a gas cracker, the differential between gas and oil is academic.

“The project has remained as significant for us as it did before, regardless of the oil price. This gas is coming in at a lower price than we could have sourced locally. We’ve now got our gas crackers profitable and it’s made our naphtha crackers more competitive too.”

“As an organisation we’re very focused on growth and can see lots of opportunities in this portfolio” 

David Thompson - IneosJIM RATCLIFFE
Chairman, INEOS

The programme’s success has since led to the first substantial investments in the European chemicals industry for some time, he notes.

Among the highlights this past year has been the acquisition of Arkema’s oxo alcohol business, which include Arkema’s stake in Oxochimie, the joint venture at Lavera between INEOS and Arkema. And there were even more ambitious plans to follow.

A bold new move into the automotive market soon stole the headlines, with a commitment to build “the world’s best 4x4” off-road vehicle, replacing the now retired Land Rover Defender.

INEOS then revealed it was to build the region’s largest-ever butane storage tank in the Port of Antwerp. At 135,000 cubic metres, it will store competitively-priced imported butane. The move would position INEOS as a major player in the global LPG market.

This was followed by an approach to buy the 235 mile Forties Pipeline System (FPS) business from BP, strengthening its foothold in the UK oil and gas market. The FPS delivers almost 40% of the UK’s North Sea oil and gas, and importantly, supplies feedstock to Grangemouth.

“Our North Sea activity is a key area for us so that’s why we’ve acquired the FPS from BP. The logic is back integration in the supply chain,” notes Crotty.

Back in Britain at the new London headquarters
Back in Britain at the new London headquarters

“The acquisition includes the Kinneil gas processing plant, which means the entire Grangemouth site is under one owner again. We’ve now secured our own supply base back through to the North Sea and can manage it effectively. There are efficiency gains to be made and it’s great business for us.”

The entire oil and gas business from Denmark’s DONG Energy was subsequently targeted and completion of that deal was imminent at time of publication. This will allow INEOS to significantly expand its trading and shipping activities and become a major trader in the sector – and the fastest-growing entrant in this key energy basin.


“It’s a great business that gets us into new sectors of the North Sea,” adds Crotty. “We’ve been in the southern area through the Breagh acquisition these past three years but now we can also focus on the Danish offshore area, Ormen Lange field off Norway and the west of Shetland – all exciting areas for gas exploration. It’s a pretty meaningful move for us as it catapults us into the top 10 operators in the North Sea.”

To meet growing demand and improve self-sufficiency, INEOS has also allocated funds to ramp up capacity at two crackers in the region and build a new world-scale propane dehydrogenation (PDH) unit.

“We are very much a global business and we are profitable. We’ve seen some fantastic results this past year and expect the same, if not better, next year” 

Tom Crotty - IneosTOM CROTTY
Director of corporate affairs, INEOS

“We’ve always run short on ethylene and propylene into our downstream businesses but those levels have grown over the years as demand increased. That’s brought a certain level of discomfort,” Crotty explains. “We wanted to reduce those levels and now have the capability with these investments to do that effectively.”

Antwerp, Belgium, has been mooted as the most likely location for the construction of the PDH plant, which will produce 750,000 tonnes/year of propylene and cost around $1bn.

Some 900,000 tonnes/year of ethylene – equivalent to a new cracker – is to be added at its Grangemouth and Rafnes, Norway, sites. Each expansion is likely to cost around $500m.

INEOS continues to invest heavily in the North Sea
INEOS continues to invest heavily in the North Sea

The company also plans to build a 300,000 tonne/year vinyl acetate monomer (VAM) plant, with the location yet to be decided.

Investment is by no means confined to Europe either, says Crotty, with both the US and Asia remaining key areas of focus too.

INEOS remains committed to exploiting the shale gas developments in the US and the low cost base that exists there to increase its presence upstream. The business has also seen polyethylene (PE) projects undertaken through its JV partnership with Sasol, as well as the purchase of high density polyethylene (HDPE) pipe producer WL Plastics.

Ineos dragon ship
The eight Dragon ships form a “virtual pipeline” from the US

In Asia, meanwhile, INEOS Styrolution recently made its first acquisition, the K-Resin styrene-butadiene copolymers business further enhancing its styrenics portfolio.

“It’s been a really great time for us,” says Crotty. “We are very much a global business and we are profitable. We’ve seen some fantastic results this past year and expect the same, if not better, next year.”

INEOS now comprises 21 businesses across 80 sites in 16 countries, and employs 18,500 people. There have been many highlights this past year and there is a real sense of optimism moving forward. Challenges remain for the industry but both Ratcliffe and Crotty are confident that things are changing for the better and plenty of opportunities lie ahead.

Even initial resistance to fracking and shale gas exploration in the UK, or the ongoing Brexit negotiations and looming departure from the EU have done little to dampen their spirits.

From the Dragon ships project to the rejuvenation of Grangemouth, INEOS has proven that whatever the challenges, it is more than capable of overcoming them.