For INEOS’ petrochemicals plant in Grangemouth, the good news continues.
Confirmation of a £230 million loan guarantee from the UK government this summer has now helped INEOS to raise the finance necessary to ensure INEOS O&P UK can build a tank to store imports of low-cost ethane from America – and turn its loss-making business into a profitable one.
Chief Financial Officer Gerry Hepburn said the government’s financial backing had been seen by INEOS as ‘critical’ to ensuring the long-term future of one of the largest manufacturing sites in the UK.
“The loan guarantee shows support for both the UK petrochemicals sector and for one of the most important infrastructure projects in Scotland,” he said. “We have now been able to use the loan guarantee to raise INEOS funds through a public bond issue. The proceeds of the bond are now being be used to fund the ethane tank project.”
INEOS has already invested more than £300million at its Grangemouth site as part of its long-term survival plan to ensure the site can manufacture petrochemicals beyond 2017 when its current gas supply agreements end.
Traditionally Grangemouth has relied heavily on ethane gas from the North Sea but those supplies are dwindling and the INEOS plant has been forced to run at reduced rates.
Importing ethane, which it uses as feedstock, from the US will help INEOS to return its plants to full production and improve operating costs, underpinning the future of manufacturing at Grangemouth.
“Without doubt, this is one of the most important projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general,” said INEOS Chairman Jim Ratcliffe.
INEOS has hired Germany-based TGE Gas Engineering to build the ethane storage tank, which will be the largest in Europe and capable of storing 33,000 tons of ethane.
“The construction of the storage tank is complex and needs specialist knowledge,” said John McNally, CEO, O&P UK. “But we know we are working with a company that are truly leaders in their field.”
TGE built the INEOS ethylene import tank in Antwerp, Belgium, and are currently building the ethane import tank at INEOS’ plant at Rafnes in Norway.
Planning permission for the construction of the ethane tank at Grangemouth was granted by Falkirk Council in May this year.
“It will be very rewarding to see the renewal of the site starting to take shape as we begin construction work,” said Gerry.
Danny Alexander, Chief Secretary to the Treasury, said the Grangemouth guarantee was fantastic news for Scotland’s economic future, and for the UK’s energy security.
The amount of US ethane being imported will enable the ethylene cracker at Grangemouth to double production.