EPCA ’16: No significant new capacity growth likely in Europe – BASF
Tom Brown
03-Oct-2016
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.
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