€2.7 billion investment in new petrochemical complex
Its decision to invest in the new cracker is thanks to America.
The new cracker will turn US-imported ethane into ethylene and the propane dehydrogenation unit plant will make propylene from propane gas.
“Those two products are the building blocks for the entire chemical industry in Europe who make everything out of those from plastics to carbon fibre,” INEOS Communications Director Tom Crotty said in an interview with BBC Radio 4.
No decision has yet been made where the two massive integrated plants will be built, but it will not be in the UK.
“We have already spent about £2 billion over the past three years in the North Sea and in Grangemouth and we are expanding our operations in Grangemouth,” said Tom. “This is about expanding our operations in continental Europe.”
The €2.7 billion expansion is the biggest investment ever made by INEOS.
INEOS has always believed its bold decision to buy US shale gas, where it is abundant and cheap, and then ship it to Europe would make financial sense.
And it has.
“We could not do this without US shale gas,” said Tom. “Overall gas prices in America are about half of those in Europe so there is a huge difference. The reason we built this virtual pipeline between America and Europe is because we don’t have this gas available in Europe, particularly the ethane and propane.”
At Grangemouth in Scotland – where North Sea gas reserves had been declining and fracking for shale gas is still effectively banned due to a government moratorium – it is the gas from America which has saved the site from closure.
INEOS is one of the largest producers of plastic powder and pellets but it does not manufacture the low grades of plastic used to make plastic bags.
“We don’t bother with those,” said Tom. “That’s not the business we are in.”
Instead, INEOS manufactures high-end plastics for the construction industry, car manufacturers and the healthcare sector – and expects demand for those to increase.
INEOS Chairman Jim Ratcliffe said the investment, showed INEOS’ commitment to manufacturing.
“It will be a game changer for the industry and will ensure the long-term future of our European chemical plants,” he said.
Gerd Franken, CEO INEOS Olefins and Polymers North, said it would increase INEOS self-sufficiency in all key olefin products and give further support to our derivatives business and polymer plants in Europe.
“All our assets will benefit from our ability to import competitive raw materials from the USA and the rest of the world,” he said.
The integrated plant, which is likely to be built somewhere along the coast of Northern Europe, will be one of the most efficient and environmentally friendly plants of its type in the world.