EPCA ’17: Spain leaders urged to calm, Tarragona to lobby for chems - Port

03 October 2017 11:19 Source:ICIS News

Josep Andreu, port of tarragona presidentBERLIN (ICIS)--The president of the Port of Tarragona, where one of Spain’s largest chemical parks is located, urged Catalan and Spanish leaders to establish a serious dialogue to return to normality, following the snap tumultuous vote on independence held in the northeast region.

The Spanish stock exchange traded lower on Monday and the euro dipped slightly against other major currencies following the snap vote, which had not been agreed with the central government and was declared illegal by the Spanish constitutional court. 

Catalonia's Port of Tarragona is key for the Spanish chemical industry as it hosts the ChemMed chemical park, which employs more than 10,000, and has among its companies global majors like BASF, DowDuPont, Covestro, as well as Spain’s energy major Repsol or firms like ELIX Polymers, Ercros or IQOXE. 

Josep Andreu, the Port’s president, urged political leaders in Madrid and Barcelona – the Catalan capital – to sit down in a negotiation table to unblock the current impasse, which could see the region declaring independence within days, according to the regional president late on Sunday.

“I trust that in the end the rationality will prevail. The events occurred yesterday [Sunday] in Catalonia are deeply concerning and we are very worried. The central government in Madrid needs to think very carefully about the next steps, but we hope all the work we have done [with both governments] in the Port will not be thrown away,” said Andreu, pictured above.

“Independence may be an option in the future, but right now the feelings are too strong, the debate is more heart than head, and there are too many emotional arguments and too few rational ones.”

After the last months’ political tension, which culminated in Sunday’s vote, analysts have said a legally-bounding referendum, whose terms would be agreed with the central government, may be the on the cards in the medium-term.

Although opinion poll have consistently showed the majority of Catalans support holding a referendum on independence, they have also showed the majority of them would vote against it, but sources in the industry and political analysts alike have said following Sunday’s events those feelings may change.

A petrochemical trading source attending the European Petrochemical Association (EPCA) annual meeting said to ICIS on Sunday: “I’m afraid they [the police and the government in Madrid] may have woken up the beast for good.”

Port of Tarragona’s Andreu said, however, that he wanted “and needed” to remain optimistic and hoped for a negotiated exit to the current political – and social – turmoil.

Moreover, he asked for a “proper debate” about the pros and cons of an independent Catalonia, a debate so far absent as the two sides of the argument have actually not debated at all.

“At some point, somebody will have to explain the questions that could affect an independent Catalonia. There are so many questions answered, like the type of taxing system the new country would have, how to manage the logistics and the infrastructures like ports or airports,” he said.

“Companies want legal security for their businesses, and undoubtedly a potential independent Catalonia would be a new scenario about which they don’t know much about yet, and that would cause a lot of uncertainty. In general, big companies would always favour the status quo to remain the same.”

He concluded by saying that while the Catalans who attempted to vote on Sunday may be passionate nationalists, “we don’t know what other parts” of the region’s society thinks as they may not be as outspoken as those wanting an independent country.

Whatever the case, he recognised the tension has gone too far and the emotions should be tamed down.

“I want to be optimistic. I need to be optimistic. You can’t manage a country only with emotions so what I want is for the two governments [Catalan and central] to sit down and start an immediate dialogue about future steps,” he said.

Whatever the outcome of this turbulent week for Spain is, Andreu said he will continue to be focused in securing for the Port of Tarragona the infrastructure it needs and lobby for lower electricity costs for the companies present at the site.

In a common plea with the Spanish chemical trade group FEIQUE and the country's main trade unions, as well as corporates like energy major Cepsa, Andreu showed some satisfaction for the progress made with a new railway to connect the Port's site with the rest of Europe due to be started up in 2020.

While currently there is a connection with France through the Pyrenees the tracks width is different from those in the rest of Europe following an isolationist Spanish policy dating back to the 19th century.

While mostly-passenger high-speed lines have already adopted the European width, cargo from Tarragona gets delivered slower for the logistics problems presented by the width at the French border.

“I think we are advancing, not with the speed we would like but there has been progress, anyway. They new railway is to open in 2020, for example. However, companies at the Port and the petrochemical site still need lower electricity costs, which is a drag in our competitiveness compared to other European peers,” said Andreu.

“We are lobbying for a system which follows the German model, where the energy produced within a site can be used at the site. Currently, a lot of companies at the Port produce energy but that power is sent back to the national grid, and when it returns it does so at a much higher price.

“There is a EU directive which would allow Spain to pass a law which would allow the companies to share the electricity costs at the park. We are lobbying the government to go ahead with this.”

ChemMed, the collaboration between Tarragona's chemical trade group and the Port, was started up as a way to attract investment to the chemical park, which currently account for around 65% of the Port's space, said Andreu.

No new investments have been announced yet, although the Port's president spoke of several Chinese companies which have showed interest in investing at the chemical park or even setting up joint ventures with current tenants, but he would not disclose more details.

“Some Chinese companies have been looking at investments at the park, taking advantage of having chemical majors at the park which could supply them with certain feedstocks to produce. Another [option] for them would be to form joint ventures. A producer of sealants and adhesives from China has been analysing investment opportunities. However, I can’t disclose more about this potentiality.”

“And of course any Chinese company would be interested in the Port given our connectivity with the rest of Europe, or the excellent infrastructure we have for traffic of road vehicles. There is space to invest at the chemical park and there is space to invest at the Port itself.”

Since it was formed in 2016, the current Spanish government structure placed the industry-related issues under the command of the minister for the economy, Luis de Guindos.

Trade group FEIQUE's director general, Juan Antonio Labat, has referred to this in previous occasions as being "at the heart" of the government's action, which has also created sectorial tables to boost specific industries with potential, being one of them chemicals.

Andreu agreed, arguing the government in Madrid is paying more attention to the manufacturing sectors, adding that the right way to approach manufacturing as industry is key for developed countries in order to create dynamic economies, not only focused in services.

“A developed economy needs around 25% of its GDP coming from manufacturing, and we want to get there,” he concluded.

The European Petrochemical Association (EPCA) annual meeting runs from 30 September to 3 October in Berlin.

Interview article by Jonathan Lopez

By Jonathan Lopez