STRONG EUROPEAN PETROCHEM PRICES TO BUOY PROFITS

Europe's petrochemical producers expect hefty prices for their products to show up in good financial reports for 1994. The annual figures of British Petroleum Co. plc, for example, are expected to show that BP Chemicals had a good year. "Self-help" measures likely will get the credit for improvements in BP's first half 1994 returns. Surging prices buoyed returns for the third and fourth quarter. Meantime, BP is fine tuning its petrochemical operations via expansion in China and

Feb. 13, 1995

3 min read

Europe's petrochemical producers expect hefty prices for their products to show up in good financial reports for 1994.

The annual figures of British Petroleum Co. plc, for example, are expected to show that BP Chemicals had a good year. "Self-help" measures likely will get the credit for improvements in BP's first half 1994 returns. Surging prices buoyed returns for the third and fourth quarter.

Meantime, BP is fine tuning its petrochemical operations via expansion in China and reduction of its interest in an Antwerp plant.

EUROPEAN SCENE

European petrochemicals producers reported a return to flat out, profitable operations last year despite surplus capacity and other problems (OGJ, Oct. 31, 1994, p. 16).

Price rises that began in the third quarter have been maintained. However, one source called this a roller coaster ride: while things now look good, another downturn is expected within months.

"There are still structural problems in the industry," said the source. "There is now no incentive to close even uncompetitive crackers. With the next downturn, the industry's problems will come back to haunt it."

Another source said petrochemical producers are enjoying current high prices but do not expect them to continue: "There is no 'feel good' factor."

Companies are dusting off old plans for expanding production capacity, "but nobody is committing to any plant construction or debottlenecking."

BP OPERATIONS

BP's expansion in China is to take place through a letter of intent signed with China Petrochemical Corp. (Sinopec). The letter calls for further cooperation on petrochemical projects based on BP Chemical's technologies.

BP Chemicals is negotiating to acquire a 51% interest in a planned 150,000 metric ton/year acetic acid plant at Sinopec's Sichuan Vinylon site. The plant is to go on stream in 1998, using BP'S methanol carbonylation technology.

Also under discussion between BP and Sinopec are:

Expansion of Sinopec's linear low density polyethylene plant at Lanzhou.
Licensing of acrylonitrile technology
A market study for a world scale acrylonitrile plant in Jinshan province.

BP granted its first technology license to Sinopec in 1976, covering an acrylonitrile plant at jinshan. Since then, BP has sold to China seven further acrylonitrile licenses, three polyethylene process licenses, and one acetic acid process license.

BP expects to announce this month plans for sale of a part or full interest in its Antwerp petrochemical plant.

BP's board last year considered a management buyout of the plant, but this was rejected. Other bids are being considered. These are said to include sale of the plant, with some production by BP continuing at the site under a third party usage scheme.

Antwerp plant capacity is 127,000 metric tons/year of ethylene oxide and 130,000 metric tons/year of ethylene glycol.