A poll of members of the Chemical Industries Association (CIA), London, has revealed reduced short term investment plans, particularly in petrochemicals and plastics.
The U.K.'s chemicals sector as a whole said 1994 capital spending will amount to 1.97 billion ($2.96 billion). Adjusted for inflation, this is down from l.92 billion ($2.88 billion) spent in 1993.
"Companies have responded to difficult economic conditions by further reducing their investment plans," CIA said. "Predicted spending levels in 1994 and 1995 are 13% below those expected in last year's survey."
Petrochemicals and plastics accounted for 10% of total investment in 1993 and 12% of the 5.82 billion ($8.73 billion) outlay expected in 199496.
Petrochemical and plastics manufacturers trimmed their 1994-96 budget 16% from last year's survey.
Spending on environmental protection across all sectors is expected to continue to account for a growing share of the total.
As a share of total capital outlay, environmental protection is expected by CIA to rise from 14% last year to 15% this year, 16% in 1995, and 20% in 1996. About 60% of environmental spending stems from legal requirements.
CIA reported confidence in recovery of the U.K. economy but continuing concern about European competitiveness and slow growth. Brighter prospects are seen in the U.S. and Asia.
PROCESS FORECAST
At a CIA conference in London, Tony Taylor, consultant at Construction Forecasting & Research Ltd., London, revealed a flat outlook for process plant spending across the U.K. oil and gas sector.
Taylor estimated total oil and gas production investment for 1993 at 4.7 billion ($7.05 billion). Process equipment accounted for l.3 billion ($1.95 billion).
Taylor predicted a record number of U.K. fields will receive development approval during the next 3 years. The 62 fields slated for development hold reserves totaling 3.5 billion bbl of oil and 13 tcf of gas.
"This is equivalent to about 30% of the U.K.'s remaining commercial reserves," Taylor said. "By 2000 they could account for 40% of total U.K. production."
Development of these fields is expected to require a 15 billion ($22.5 billion) outlay. Development spending is expected to peak at 3 billion ($4.5 billion) in 1996 out of a total 4.3 billion ($6.45 billion) upstream outlay.
"One normally expects some appearance of patchiness," Taylor said of the upstream spending outlook.
"The continuation of spending around the 4 billion ($6 billion) mark is a welcome thought."
Total U.K. petroleum refining outlay for 1993 was given by Taylor as 350 million ($525 million). Process plant spending amounted to 250 million ($375 million).
Taylor said U.K. refining is experiencing an upturn in investment. He expects the 1979 peak to be matched in 1996-97.
"This is due to spending on efficiency improvements and the need for additional unleaded capacity," Taylor said. "It will be helped by the forecast of North Sea output increasing again. It is unlikely that this level of investment will be a permanent feature."
The chemicals sector as a whole, including petrochemicals, was said to have spent 2 billion ($3 billion) last year. Process plant outlay amounted to 1 billion ($1.5 billion), Taylor said.
