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Borealis CEO: Decision on Belgium PDH project imminent, "very optimistic" on plans

August 6, 2018
Chemical Value Chain

Borealis still plans to announce a final investment decision by the end of next month on a $1-billion propane dehydrogenation (PDH) project at the company’s Kallo, Belgium, site, says Borealis CEO Alfred Stern.

In an interview with CW on Monday, Stern said, “we are still very optimistic about the plan and believe we are in a good position.” The PDH project would have capacity for 740,000 metric tons/year of propylene.

Ineos confirmed earlier this year that it too is considering plans for a PDH plant, also in northern Europe. “We are always scanning the market and will take [the Ineos project] into consideration for our decision,” Stern says. “But we have experience of operating an existing PDH unit at Kallo for many years and would have good synergies there.”

Meanwhile, Borouge, a joint venture between Abu Dhabi National Oil Co. (Adnoc) and Borealis, is moving ahead with a massive expansion of capacity at Ruwais, AbuDhabi, through the $9-billion Borouge 4 project. Borouge 4 would include a mixed-feed cracker with expected capacity for 1.8 million metric tons/year (MMt/y) of ethylene and 1MMt/y of propylene and a more than doubling of Borouge’s polyolefins capacity from 4.5 MMt/y to 10 MMt/y. Borealis is a 64-36 joint venture (JV) between state-owned Mubadala Investment Co. (Abu Dhabi), the parent of Adnoc; and OMV (Vienna).

Borouge awarded a pre-front-end engineering design (pre-FEED) contract to Advision in July for Borouge 4. Stern expects to conclude the pre-FEED stage in late 2018 or early 2019. “We are identifying technologies, assessing integration with the Borouge 1-3 complexes, and feedstocks,” Stern tells CW. “If the pre-FEED is successful we’ll enter full FEED in 2019.”

The Borouge 1-3 polyolefin complexes are each based on an ethane cracker. But the Borouge 4 cracker will be designed to consume naphtha, ethane, propane, and refinery off-gases and, as a result, will have a wider derivative slate. “The pre-FEED will determine feedstock availability and what the best mix will be,” Stern says. “The focus of Borouge 4 will be on polyolefins but non-polyolefin products will also be included.”

Borouge recently awarded an engineering, procurement, and construction contract to Maire Tecnimont for a 480,000-metric tons/year polypropylene (PP) plant, called PP5, that will form part of the Borouge 3 complex.

Borealis and Nova Chemicals—another Mubadala group company—jointly own Novealis Holdings, which holds 50% of the Bayport Polymers (Bay-Pol) JV with Total. The JV received regulatory approval and broke ground on a 1-MMt/y ethane cracker at Port Arthur, Texas, and appointed Diane Chamberlain as president, during the second quarter. Bay-Pol will take a final investment decision on a 625,000-metric tons/year polyethylene (PE) plant, based on Borealis’s Borstar technology, at Port Arthur in the third or fourth quarter of 2018, Stern says. The JV also includes Total’s existing PE plant at Bayport, Texas.

Separately, state-owned United Chemical Co. (UCC; Astana, Kazakhstan) and Borealis have launched a feasibility study for a previously announced project to build a 1.25-MMt/y ethane cracker and two PE units based on the Borstar process in Kazakhstan. “We will come to some conclusions in the first quarter of 2019, based on the feasibility study,” Stern says.

The study will examine the cost and availability of ethane feedstock in Kazakhstan and demand projections for the Central Asia region. Stern estimates that consumption of polyolefins is growing 4-5%/year in the region. “We believe that Borstar PE can satisfy some of that demand,” he says. Stern confirms that Borealis and UCC are also in discussions on whether to include a PDH-PP project, announced earlier by UCC, in the planned JV.

Borealis will also launch a feasibility study by the end of September on a previously announced $500-million project to build a 100,000-metric tons/year ethylene-vinyl acetate/advanced polymer plant at Daya Bay near Huizhou, China, to serve the wire and cable market in that country. “We see an opportunity, with market demand, for specialty copolymer production in China,” Stern says. A final investment decision on that project is expected in the second half of 2019. The plant would be built in a chemical industry park near to production plants operated by other multinational chemical producers.

Borealis last week posted an increase in second-quarter net profit and sales, citing healthy integrated polyolefin margins. Polyolefin volumes increased compared with the previous quarter but margins contracted compared with the year-earlier period, when they were at “a very high level,” says Borealis CFO Mark Tonkens. Higher feedstock costs helped to squeeze margins, Tonkens says. There was also a less favorable supply/demand balance in the polyolefin market, he says.

Borealis’s fertilizer business also faced challenging market conditions in the second quarter due partly to “disappointing” demand and relatively high gas feedstock costs, both outcomes of a severe winter in Europe. “Fertilizer industry margins are suffering and more supply is coming into the market, some from Eastern Europe,” Tonkens says.

Borouge contributed about 40% of Borealis’s net profit in the second quarter, Tonkens says. All of the PP plants at the Borouge 3 complex are operating after Takreer, an Adnoc refining subsidiary, started up a 500,000-metric tons/year PDH plant earlier this year that is supplying propylene to the plants. The PP plants had been offstream after a fire at a Takreer refinery that halted the facility’s production of propylene. “The Adnoc PDH plant is supplying propylene to the Borouge 3 PP plants and they are ramping up but full supply [of propylene] is still required,” Stern says.

Borealis does not expect the Adnoc refinery propylene plant to be back online before next year. “We hope the PP plants will be fully back onstream in 2018,” Stern says.

Tonkens expects Borealis’s polyolefin integrated margins to continue softening from current healthy levels, on good demand, for the rest of this year. The tough environment in fertilizers is also expected to continue. “We believe it will remain under pressure as a segment,” Tonkens says.

By Ian Young

Source: Chemical Week

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