1 / 55

European Petrochemical Industry

European Petrochemical Industry. John F. Wyatt, Parpinelli TECNON, Milan. Paper presented at Algerian Petrochemical Seminar 26 th February 2001. European Petrochemical Industry Outline. West European Market for Petrochemicals Petrochemical Industry Restructuring

koto
Download Presentation

European Petrochemical Industry

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. European Petrochemical Industry John F. Wyatt, Parpinelli TECNON, Milan Paper presented at Algerian Petrochemical Seminar 26th February 2001

  2. European Petrochemical Industry Outline • West European Market for Petrochemicals • Petrochemical Industry Restructuring • Strength/Weakness of European Petrochemicals • Drivers for the Future • Market Growth • Feedstock • Refinery Integration • Strategy/Positioning of Major Players • Conclusions

  3. Western Europe (countries indicated with ) Population : ~450 million

  4. European Chemicals v Total Market INDEX 1990 = 100 500 Petroleum 400 Asian Crisis Totalmarket* 300 Chemicals 200 Automotive Paper 100 Steel 1990 1998 * European Datastream index

  5. Market Demand European share of world petrochemicals demand is falling but Volume demand and market concentration is attractive

  6. Market Demand West European share of World demand (%)

  7. Market Demand West European share of World demand (%) Note coproduct monomer has lower decrease

  8. Market Demand Historical European market growth has exceeded macroeconomic growth and Indications are that petrochemical derivatives continue to penetrate European markets

  9. Market Demand Basic Petrochemicals - Europe “v” World Million tons Million tons 1980 2000 C2 C3 C6 PX C2 C3 C6 PX

  10. Market Demand Thermoplastics - Europe “v” World Million tons Million tons 1980 2000 PE PP PS PET PE PP PS PET

  11. Supply and Demand European SD balances have followed global cyclic trends Historical export posture characteristic of the 1980’s has disappeared Investment following mid 1990’s has been slow with resultant improvement in plant utilization

  12. European Supply and Demand Ethylene Million tons Capacity Demand

  13. European Supply and Demand Propylene Million tons Capacity Demand

  14. European Supply and Demand Benzene Million tons Capacity Demand

  15. European Supply and Demand Paraxylene Million tons Capacity Demand

  16. Industry Restructuring European petrochemicals through repeated rationalisation & restructuring has been moving from a : National, “balanced “operational structure To Product focussed, world scale regional manufacturing centre

  17. Historical Development State Aid Refinery Integration “Balanced” operation Multi-product lines Small scale Consumer or semi-finished products - principally to domestic market

  18. Historical Development Sites were under single ownership • refining and/or chemical origin • minimise intermediates product flow • maximise sales to consumer/processing sectors BP : Baglan Bay(UK), Basf : Ludwigshaven(D), CdF : Carling(F), Montedison : Porto Marghera(I) PQU : Santo Andre(B), Repsol : Portollano(E)

  19. Historical Structure– no longer valid! Small scale Too many product lines damaging to: • Investment • Infrastructure • R & D support Limited bargaining power for raw materials

  20. Search for the Optimum Petrochemical Industry Structure National compromise Short term gains “Common” solutions Optimum structure ?? Condominiums Asset stripping

  21. Industry Restructuring Result Increased number of “interfaces” between the upstream to downstream integrated chain

  22. Strengths and Weaknesses Strengths are Market Driven Weaknesses are Supply Driven

  23. Strengths Established Market Support world scale domestic investments Significant high technology/high value added sector Infrastructure Marketing expertise Distribution networks Storage & logistics support Headquarters Several international and regional major players

  24. Weaknesses Feedstock Limitations Major importer of naphtha in competition with Asia Fragmented Production Base Many manufacturing sites add to fixed and logistics costs

  25. Weaknesses Scale Average European capacities are approximately 65% of US Gulf Coast/Middle East plants Utility Costs Intervention by National governments still leading to non-competitive fiscal burden - but this is changing

  26. Drivers for the Future Market Growth Feedstock Refinery Integration Strategy/Positioning of Major Players

  27. European Market Growth European petrochemical demand is expected to grow on average at between 3.5% and 4.0% per year In all sectors, demand growth, between 2000 and 2010, exceeds projected investment in new capacity In addition to new ethylene and polymer capacity to satisfy domestic demand, significant “on-purpose” production of propylene and paraxylene will be required

  28. European Market Growth

  29. European Market Growth

  30. Feedstocks Europe imports ~50% of olefins feedstock requirements and competes strongly with Asia for available supplies

  31. Ethylene Variable Cost US$/ton European Naphtha Saudi Propane Saudi Ethane

  32. Feedstocks Result Erosion of competitive position in export markets Drive to refinery/petrochemical integration Development of partnerships/commercial agreements for secure supplies

  33. Refining/Petchem Integration European petrochemical manufacturers have frequently changed position

  34. Refining/Petchem Integration The 1960-1970 Period: DIVIDE! • A period of easy access to feedstock: Petchem Companies going on their own • Crude less than $2/bbl (below $10/bbl in 1999 $) • Petchem Companies mainly Chemical Companies • Expectations for High Petrochemical Growth

  35. Refining/Petchem Integration The 1970-1980 Period: BRIDGE! • Access to feedstock more difficult and expensive: Petchem Companies Look at Security of Supplies • Yom Kippur War, Crude rises above $10/bbl ($40/bbl in 1999$) • Iranian Revolution, Crude jumps to over $30/bbl ($70/bbl in 1999$) • Chemical Companies consider “back-integration” • Petchem Companies include more Integrated Oil Companies

  36. Refining/Petchem Integration The 1980-1990 Period: DIVIDE…. • Incompatibility: the focus for refiners is Gasoline Competition for the same Naphtha Feedstock • Cyclical Profitability in Petchem Business Disincentive for Refiners • Refiners need Capital to Invest into Conversion Capacity • Petchem Companies Invest for Access to “Non-Refinery Feedstock”

  37. Refining/Petchem Integration In 1980 >85% of Ethylene Was Produced from Naphtha By 1990<65% of Ethylene Was Produced from Naphtha

  38. Refining/Petchem Integration The 1990-2000 Period: BRIDGE... • Issues of Volume & Quality in Gasoline Push Refiners Back to Petrochemicals • Gasoline Market Stagnates and then Turns to Negative Growth • Regulations on Gasoline Quality Call for Benzene Removal • New Conversion Capacity in Refineries Adds Flexibility at the Gasoline/Petrochemical Interface • Profitability in Petrochemicals Exceeds Refining Margins • Increased Synergy

  39. ? Refining/Petchem Integration“Bridging” the “Divide” • The 1980-2000 period: driven by “Refinery” Forces Petchem Driven Refinery Driven Bridge Divide

  40. Expected Impact at the Gasoline/Petchem InterfaceGasoline Composition in Western Europe Decrease Increase Increase Decrease

  41. Expected Impact at the Gasoline/Petchem InterfaceNaphtha use by Industry

  42. Expected Impact at the Gasoline/Petchem Interface Primary BTX Production in Western Europe MMT

  43. Expected Impact at the Gasoline/PetchemInterfacePrimary BTX Production in Western Europe Future Yields Will Favor Petchems, Mostly at the Expense of Bottoms Integrated Refining/Petchem Operations Will Exert a Growing Influence MMT

  44. Expected Impact at the Gasoline/Petchem Interface Propylene Production from FCCs in Western Europe MMT ?

  45. Expected Impact at the Gasoline/Petchem Interface Propylene Production from FCCs in Western Europe MMT FCCs Role in Propylene Production Is Set To Continuously Increase ?

  46. Strategy/Positioning of Players Product strategy focus is stimulating the development of petrochemical “clusters”

  47. Strategy/Positioning of Players Contribution to Fixed Costs Processing Commodities Base PC’s Central Support20% 30% 10% Manufacturing 40% 30% 80% Marketing40% 40% 10%

  48. Strategy/Positioning of Players Contribution to Variable Costs Processing Commodities Base PC’s Feedstock40%60%90% Utilities20%15%5% Logistics40%25%5%

  49. Strategy/Positioning of Players Olefins Aromatics Positioning in National/European industry Competition driven by feedstock position • Partnerships/Commercial agreements • Government incentives Base petrochemicals becoming increasingly merchant

  50. Strategy/Positioning of Players Polymers, Fibers, Intermediates European operation integrated in Global business Target to maximize volume sales Competitive position driven by cost of sales • Centralized business support • Multiple sourcing close to markets

More Related