PETROCHEMICAL MARKETS
Ineos chairman Jim Ratcliffe hits out at EU “green” taxes and shale disadvantage / Open letter to the commission / “Nobody seriously invests in Europe”
Outspoken Ineos (Rolle / Switzerland; www.ineos.com) chairman Jim Ratcliffe, who now goes by “Sir Jim” in the UK after being knighted by Queen Elizabeth, has launched a broadside against the EU, slamming the single market for its high “green” taxes and other shortcomings. In a letter to European Commission president Jean-Claude Juncker, the multibillionaire chemicals and plastics entrepreneur asks the rhetorical question why anyone should invest in Europe, while tossing figures published by the European Chemical Industry Council (Cefic, Brussels / Belgium; www.cefic.org) about the region’s competitiveness back into in the faces of his fellow industry chieftains.

In his letter, the Ineos chairman lists one-by-one all the things he sees as wrong with Europe that in his view need to be righted. The region has the “world’s most expensive energy and labour laws, which are “uninviting for employers.” What’s more, it levies “green taxes that at best, can be described as foolish” and that have “the opposite effect to how they were intended.” European environmental technology is outdated, he adds. Rubbing salt into wounds that other players haven’t openly grumbled about suffering from, Ratcliffe charges that Europe is “no longer competitive,” having seen its world market share, in the last decade alone, collapse from 30% to 15%.

The figures Sir Jim quotes seem to have been taken directly from Cefic’s “Facts and Figures 2018” report, in which the organisation representing European chemical producers itself complains about the same things as Ratcliffe did in his letter to Juncker, minus the doomsday scenario. The perceived shortfall is nothing new – European producers have been complaining of such disadvantages for decades. The difference now is that US competitors have a leg up through access to cheap shale gas-derived cracker feeds. As Cefic notes, it costs three times as much to produce ethylene in Europe as in the US. This is what has consistently dogged Ineos.

However, despite the region’s perceived disadvantages, in contrast to the Swiss-based group and bizarrely anticipating Ratcliffe’s needling, Cefic asserts that “the European chemical industry is in good shape, and everything is looking rosy for our industry in the short term.” Clearly, at first sight, it says, “this is not a sector in difficulties facing an urgent need of protection or requiring action.” As to labour costs, the association’s figures show that European productivity is 77% higher in chemicals than the manufacturing average.
Comment – Dede Williams, freelance journalist
Apart from the obvious shale gas trump card, Ratcliffe’s reference to the US being “fully in the process of renewal” may perplex some on both continents, especially his contention that US companies are installing “the world’s finest chemicals technology which has a fraction of the emissions we saw a generation ago.” His assertion that while the US doesn’t have green taxes, “it does insist on the highest environmental standards” could be harder to assess from across the pond if it were not for the intensive US press coverage of president Donald Trump’s efforts to roll back such standards that even before were generally not regarded as superior to the EU’s. Just days ago, the New York Times published comprehensive charts illustrating what disastrous effects these plans would have on the environment, especially with a former coal lobbyist as head of the US Environmental Protection Agency (EPA).

Is this promise of de-regulation what is appealing to Ineos? If so, having glimpsed paradise, why is it investing in the EU at all, rather than in the US, which as Ratcliffe mentions “is in the middle of a USD 200 bn spending spree for 333 new chemical plants”? Perhaps because building up a competitive position as an outsider in an already crowded shale frenzy-fired investment rush – in which even European players already well established in the US, like BASF have declined to become involved – is not easy. Or could it be because most of its assets are in Europe?

Last month, Ineos announced what it called the “largest investment of its kind in Europe for more than a generation and an important development for the European petrochemical industry.” The chemicals and plastics producer said it had selected Antwerp / Belgium as the site for a new ethane cracker – see Plasteurope.com of 17.01.2019 – a project expected to cost around EUR 3 bn, including a propane dehydrogenation (PDH) unit.

In confirming the long expected plans, Ineos made no mention of onerous taxes, labour costs, excessive regulation or whether it was receiving any benefits from choosing the heavily industrialised and competitive port city as a location, much less why it had chosen a site in the EU at all, rather than the UK, which – if all goes to plan – will soon be outside the union's regulatory sphere?

Even ahead of his letter to Juncker, Ratcliffe may have already delivered the answer. Locating the project at Antwerp is “uniquely” possible because of the group’s ability to import huge quantities of cheap gas from the US, he said. Ineos already has a drawer full of other European projects in planning or in progress, including expanding its crackers at Grangemouth / UK and a EUR 200m programme to upgrade ethylene oxide (EO) production in Antwerp and Lavera / France. The only direct investment it has in the US “Eldorado” is construction of an 100,000 t/y ASA plant at Bayport, Texas – see Plasteurope.com of 05.05.2017 – a site it inherited with the takeover of Styrolution from BASF.
15.02.2019 Plasteurope.com [241781-0]
Published on 15.02.2019

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Date of print: 25.08.2019 15:30:35   (Ref: 323503334)
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