INEOS plans $2bn capex for Europe PDH unit, cracker expansions

12 June 2017 16:23 Source:ICIS News

Antwerp harbour, industrial area

LONDON (ICIS)--INEOS is to invest around $2bn in the development of a propane dehydrogenation (PDH) in Europe and the expansion of crackers in Grangemouth, UK and Rafnes, Norway, an executive at the Switzerland-headquartered chemicals major told ICIS on Monday.

A 750,000 tonne/year PDH unit current under discussion for construction in Europe would cost around $1bn, according to INEOS director Tom Crotty, with Antwerp, Belgium, currently standing as the strongest candidate to host the plant. Expansions at each of the crackers would total around $500m, he added.

With the expansion, he added the company expects to bring up the crackers' capacities to “over 1m[tonnes/year]” and with the PDH planned plant the company would start addressing the chronic shortage for that material, which had become “too big”, he said.

“We have got a lot less propylene around with the swing to gas cracking, and the issue for us is that we always run short on ethylene and propylene but [the shortage] has grown too big for us and that’s why we are addressing it,” Crotty said said.

“We will not be wondering what to do with the propylene – we’ll use it ourselves to replace purchased propylene. From a commercial point of view, this is a low risk project," he added.

The exact timeline of the three projects was not disclosed, but are all ere expected to take three years from the date of their commencement, according to an INEOS spokesperson. ICIS had reported on INEOS exploring options to build a PDH European plant in May.

“These are three major new projects. Collectively, it’s the equivalent of building a new world scale cracker in Europe,” said Jim Ratcliffe, chairman of INEOS.

INEOS said the construction of the PDH plant and the expansion of cracker capacity would allow it to “increase our self-sufficiency in all key olefin products” as well as supporting its derivative business and polymer plants in the region.

“All our assets will benefit from our capability to import competitive raw materials from the US and the rest of the world,” said Gerd Franken, CEO of INEOS Olefins & Polymers North.

INEOS produces almost 4.5m tonnes of ethylene and propylene across Europe, the company said, while remaining a large buyer of ethylene and propylene in the region, something it aims to correct with the investments announced.

INEOS said the cracker expansions would add nearly 900,000 tonnes/year of ethylene capacity.

“These projects represent the first substantial investments in the European chemicals industry for many years. It has only been made possible because of INEOS massive $2bn investment in our Dragon Ships programme which allows us to import ethane and LPG [liquefied petroleum gases] from the US in huge quantities,” Ratcliffe concluded.

The firm's Grangemouth cracker has the capacity to produce 800,000 tonnes/year of ethylene, while the Rafnes facility has an annual capacity of 620,000 tonnes/year, according to ICIS plants and projects data.  

Other INEOS’ ethylene production facilities in Europe include two crackers in Cologne, Germany, with production capacities of production of 660,000 tonnes/year and 450,000 tonnes/year.

The company’s current European propylene capacities include one plant in Grangemouth – with annual production capacity of 190,000 tonnes – while a plant in Cologne has the capacity to produce 655,000 tonnes/year.

US investment bank Jefferies said in May capital expenditure for a PDH plant of the scale mulled by INEOS could surpass $1bn.

Previously-announced plans by competitor Borealis to build a world-scale PDH plant would not affect INEOS’ plans to build its own plant in the region, due to the recurrent propylene deficit INEOS suffers in Europe, currently at around 1m tonnes/year.

In September 2016, Borealis announced a feasibility study to build a 740,000 tonne/year PDH plant at its complex in Kallo, Belgium. Poland's Grupa Azoty is also understood to be developing a large-scale PDH unit.

A spokesperson for Borealis said to ICIS on Monday: "Borealis takes note of the announcement by INEOS. This feasibility study [started up by Borealis in 2016] is still ongoing."

(update re-leads story, adds capex figures, commentary, timelines)

Pictured above: Antwerp harbour in Belgium, with view of industrial area. INEOS said Antwerp could be the location for its PDH plant
Source: WestEnd61/REX/Shutterstock

ICIS will be publishing an interview with INEOS' executive Tom Crotty on Tuesday 13 June.

By Jonathan Lopez