Atofina implements petchem expansion strategy to reduce costs
Atofina's chairman and CEO Francois Cornelis says the company will spend 1.5 billion euros this year to expand its petrochemical, polymers, and specialty businesses.
Oil & Gas Journal
Atofina, the chemical branch of TotalFinaElf, Paris, is embarking on a major petrochemicals expansion initiative, capitalizing on an expected 4-8%/year demand growth for the next 3 years. The company is dedicating nearly half of its chemicals capital expenditures to petrochemicals in that period.
Atofina's activities are divided among petrochemical and commodity polymers, 38%, intermediates and performance polymers 26%, and specialties 36%. In 2000, petrochemicals and polymers attributed 8 billion euros to Atofina's 20.8 billion euros in sales. This category includes base petrochemicals, polyolefins, polyvinyl chlorides (PVCs), polystyrenes, and fertilizers.
This year, said company chairman and CEO François Cornélis, Atofina will invest 1.5 billion euros in new plants, upgrading, and acquisitions. About 500 million euros of this investment will be made in North America.
Atofina has adopted both an expansion and streamlining strategy for the next 3 years.
The company's petrochemical assets represent 9% of its total capital employed, compared to 12% for other majors on average. By expanding existing olefins and olefin derivative sites into large-scale complexes in the next 3 years, Atofina expects to reduce its unit costs in Europe and the US. This is in response to an expected 6% growth in polymer demand between 2000 and 2003.
Atofina expects volume growth to reduce unit fixed costs by 20% between 2000 and 2003.
At the same time, Atofina plans to divest 1.5 billion euros of nonstrategic chemical assets between 2000 and 2003. To date, it has completed 400 million euros of this planned rationalization. Its divestments have occurred mainly in the company's intermediate and performance polymers and specialty lines.
Although not offering specifics, Cornélis said he also plans to strengthen the company's position in the fast growing regions of Asia and the Middle East. "Our goal," he said, "is to grow the business in a profitable way and in accordance with our size, expand worldwide."
The company has three strategic objectives for the period between 2000 and 2006:
- Grow sales by 5%.
- Improve profitability by 1%/year, measured by return on capital employed.
- Acquire sales in newly industrialized countries, such as Asia and Latin America.
One of Atofina's strengths is the integration of large-scale olefins plants with existing refining assets. The company has ethylene and propylene production plants in Antwerp; Gonfreville and Lavéra, France; and Port Arthur, Tex.
New projects focus on capacity expansions or integration of refining and olefin plants.
Atofina will complete a 90,000 tonne/year (tpy) expansion of one of its naphtha cracker trains at Carling, France, in 2001. Fina Antwerp Olefins, a joint venture between Atofina and ExxonMobil Corp., will increase its ethylene production capacity to 1.4 million tpy by upgrading its No. 2 naphtha cracker by the end of 2002.
The Lavéra cracker is a 50:50 joint venture with BP. It sits close to both BP PLC's 210,000-b/d refinery at Lavéra and TotalFinaElf SA's 145,150-b/d refinery at La Mede. There are plans to increase the integration of this 740,000 tpy ethylene unit with the two refineries. The BP plant is rated at 210,000 b/d and Elf's at 145,150 b/d.
In North America, Atofina expects to capture $40 million/year in synergies by integrating a new steam cracker with its adjacent 176,000-b/d refinery at Port Arthur. The steam cracker is a joint venture with BASF AG, which has a 60% share of the project.
The company expects its Port Arthur naphtha cracker to start up in the fourth quarter of 2001. Its peripheral plants, which include a 900 million lb/year butadiene extraction unit, a 662 million lb/year indirect alkylation unit, and a C4 metathesis unit will come on stream in 2003 (OGJ, Nov. 13, 2000, p. 9).
Ethylene and propylene from the new cracker will feed Atofina's polyethylene plant in Bayport, Tex., and polypropylene plant in La Porte, Tex. Even with the new cracker, both the Bayport plant and the La Porte plants will purchase 30% of their ethylene and propylene needs from merchant suppliers. The La Porte plant will continue to receive propylene from a Mt. Belvieu, Tex., propylene splitter.
The refinery has prepared for the new naphtha cracker by building a $60 million condensate splitter that can take a 60,000 b/d of condensate charge and produce 45,000 b/d of naphtha for the steam cracker. Offgases from the refinery's fluid catalytic cracking unit will go to the steam cracker recovery section for recovery of ethylene and propylene.
In the summer of 2001, Atofina expects to bring a 395-km ethylene pipeline on stream in France, linking the Viriate underground storage facilities near Lyon to the Carling petrochemical complex near Metz. This 100-million-euro line connects Carling to the petrochemical plants of southeastern France.
In the polymers sector, Atofina is expanding its production of polypropylene, polyethylene, polystyrene, and PVC.
A new 380,000 tpy polypropylene plant will come online at the end of this year in Feluy, Belgium. In Antwerp, Atofina will be producing bimodal high density polyethylene by the end of 2002 with metallocene technology.
By mid 2002, Cornélis said, Carville, La., will be the world's largest polystyrene site after Atofina expands its production there from 520,000 tpy to 750,000 tpy. As well, the company eventually plans to double the size of its Carling, France, polystyrene capacity to 210,000 tpy.
By December, Atofina will start up a cleaner and more efficient vinyl chloride monomer (VCM)-oxygen oxychlorination project in Lavéra. In June, Qatar Vinyl Co. Ltd., started its 230,000 tpy VCM plant, of which Atofina holds a 12.9% interest.
Also this past June, in association with Solvay, Atofina started up a 230,000-tpy PVC plant in Martorell, Spain.
Although low natural gas prices caused a marked slowdown in US ethylene and propylene margins in late 2000 and early 2001, Cornélis said Atofina was only indirectly affected.
"We have no ethane crackers in the US," he said. "We suffered in Portland, Ore., where we lost electricity. We suffered due to energy prices, but we're not tied to natural gas. That's why we've done better than our competitors in the US."
Despite lower gas prices. most competitors are looking at the Middle East as the next source of crackers, he said, adding that no more ethane crackers are likely to be built in the US, at least without a feed-flexible option.