By ANDREW NOEL
Borealis, the Abu Dhabi-owned maker of chemicals, is already
benefiting from rival Ineos Group's plans to import cheaper
ethane into Europe
, even though the first
tankers wont dock for another year, according to CEO
The prospect of Ineos shipping ethane from the Marcellus and
Utica formations on the US East Coast starting in mid-2015
has already affected the price Borealis secured for ethane
from Norways Statoil this month by reducing the
suppliers pricing power, Garrett said.
Its already impacted the thought processes,
Garret said. Statoil realized that if they wanted to
carry on selling ethane they will have to compete with the
stuff that will be brought in by Ineos.
Borealis, based in Vienna, is studying whether it can also
import US ethane as an alternative to sourcing the feedstock
from the North Sea.
Rather than operating a fleet of smaller ships to run North
Sea supplies, importing from the US would require the
purchase of large tankers to keep the cost-per-ton down and
guarantee security of supply. Borealis would also have to
ensure sufficient storage facilities
How Ineos gets on with its plan will provide valuable insight
for Borealis as both companies would take ethane from the
same US formations and use the same Marcus Hook export
terminal. For Statoil, it was a case of negotiating a price
with Borealis for a long-term supply agreement rather than
blending the ethane back into natural gas supplies.
We think its great Ineos is doing it, as
its helped us in our other negotiations, the CEO
said. Well also see that it works as they are a
bit ahead of us in the time schedule.
Borealis, 64% owned by International Petroleum Investment Co.
and 36% by Austrias OMV, is reviewing the technical
aspects of the project
, including the need to
adjust crackers to accept more ethane, Garrett said.
The bulk of Europe
s crackers are mixed
feed or run on naphtha, so would require a complete revamp to
convert them to ethane, Garrett said.
US shale gas and the expansion
of energy companies in
emerging markets are changing the hierarchy of global petrochemical
Borealis, China Petroleum & Chemical Corp., known as
Sinopec, and Saudi Basic Industries Corp. increasing the
challenge to the likes of Dow Chemical and DuPont, Garrett
That means a new chapter for Europes chemical industry
will emerge, Garrett said. The 1990s was a period of
consolidation, with the creation of Borealis from the
combination of assets owned by Statoil, Neste Oil and OMV,
and Ineos being formed from BP's divestment of its
Garrett said he expects another wave of consolidation in the
region as more intense competition will put the squeeze on Europe
s higher-cost chemical
, many of which are more
than 30 years old.