BERLIN (ICIS)--The combination of high energy prices and extreme volatility is the key issue for petrochemicals producers, INEOS Olefins & Polymers Europe CEO, Rob Ingram, said on the sidelines of the 2022 European Petrochemical Association (EPCA) meeting in Berlin.
There is vulnerability in the value chain to meet the challenge of high prices, Ingram said, adding that there is a real risk that prolonged high energy prices will have a lasting impact on Europe’s energy intensive industries.
“The focus for quite some time has been on minimising exposure to natural gas,” Ingram said of INEOS’ own actions at a time of extreme natural gas and energy price volatility that has changed the way company’s assets are being run, and not in a normal way.
The operating changes and energy-cost related investments are expensive and have put pressure on consumption, Ingram added.
There is ongoing optimisation of operations and challenges week to week. The response has been different from site to site the INEOS executive said. The company has ethane and butane gas fed assets, for example and those feedstocks can be repurposed as fuel to replace natural gas consumption.
On integrated sites, off-gases can be used to replace the heat provided from natural gas.
INEOS is looking for some clarity on what EU member states will do to help mitigate the impact of high prices on Europe’s energy intensive industries, Ingram said.
“We need to see some concrete actions from governments,” he added.
Pressured operating rates across the industry, however, are more demand driven, he suggested.
“Demand profiles had begun to change during the summer, “Ingrams said, adding that August was “a correction month”. September and October have been slightly better but down compared with the first half of this year and to last year.
INEOS’ most significant investment, the Project One ethane cracker in Antwerp, Belgium is planned to start manufacturing in 2027. “There is still an opportunity for good investment in Europe,” Ingram said. “We have started work on the ground now.”
The cracker will have a 50% lower carbon footprint compared with the next best cracker in Europe and be 60% more carbon efficient than the average.
That efficiency is based on modern ethane to ethylene technology and designing with the expectation of the need to transition to net zero.
A credible transition to net zero would involve the use of hydrogen as supply develops and of carbon capture, Ingram said.
The costs of some of these developments are added up front for the €3-€4bn investment and involve, for example, electrification of turbines and other site components and maximised energy integration. INEOS has already stuck a deal for green electricity supply to the cracker site.
The EPCA annual meeting ran on 4-6 October in Berlin.
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