Petrochemical deals mark European shakeout

Europe's petrochemical's industry shakeout continues with disclosure of partnership changes in two recently formed giant joint ventures, Montell and Borealis.

Royal Dutch/Shell has bought for $2 billion from Montell JV partner Montedison SpA its 50% stake in the company and launched a radical shake-up of its global chemical business. At the same time, Borealis has disclosed plans to buy Austrian producer PCD Polymere GmbH, Schwechat-Mannsworth, to bolster its position as Europe's number one polyolefins manufacturer.

Meanwhile, Shell has also concluded a 50/50 polyethylene JV with Germany BASF AG, which in turn has struck a deal with BP Chemicals Ltd. to build an acetonitrile purification plant.

In a 4 billion markka ($750 million) deal, Finland's Neste Oy has decided to pull out of its giant Borealis joint venture with Norway's Statoil in a bid to refocus its assets.

Montell reshuffle

Shell will buy from Montedison its 50% stake in Montell, subject to consent of regulatory authorities. Montell will remain a separate company, although wholly owned by Shell.

A Montell official said the company hopes to conclude the deal by October and expects European Commission approval will not be a major problem, because the move will not directly affect the polypropylene market.

Montell was established in April 1995 by Shell and Montedison and now claims to be the world leader in producing and marketing polypropylene. Total manufacturing capacity is 3.6 million metric tons/year.

Peter Vogtlander, who will remain as Montell's chief executive officer, said, "This change will not noticeably affect Montell's day-to-day operation or its strategy. In fact, it will open up new opportunities because of Shell's global position and its financial strength."

Money is thought to be behind Montedison's decision to sell its interest in Montell. The Italian company has long struggled with its balance sheet. The sale is believed to have cleared much of Montedison's debts.

Shell also said that after Jan. 1, 1998, a radical reorganization will begin, aimed at creating a global focus for its petrochemical businesses. A new company, Shell Chemicals Ltd., will provide global strategies and operational advice to Shell's chemicals businesses worldwide.

Borealis changes

Neste has agreed to sell its half share of Borealis to Austria's OMV AG and International Petroleum Investment Co. (IPIC) of Abu Dhabi, a state-owned company.

OMV and IPIC will each own 25%, with Statoil keeping its 50% stake.

Neste expects the transaction to be concluded by yearend. Neste said divestiture of this non-core cyclical business will strengthen its balance sheet for expansion of core businesses.

Neste aims to focus on oil and energy business in the Nordic region and the Baltic Sea rim, while selected specialist chemicals businesses will be pursued on a worldwide basis.

The purchase of PCD by Borealis will add production capacity for 445,000 metric tons/year of polyethylene and 410,000 tons/year of poly- propylene at plants in Austria and Germany. This will give Borealis a total production capacity of more than 3 million tons/year of polyolefins and a staff of about 6,000 people.

Other deals

Shell's agreement with BASF marks the conclusion of a move late last year by Montell out of the European polyethylene business. Shell and BASF bought Montell's European assets (OGJ, Oct. 21, 1996, p. 19).

Shell confirmed the joint venture with BASF will include Rheinische Olefinwerke GmbH, an existing JV of Shell and BASF, along with Montell's polyethylene interests in Europe and BASF's polyethylene assets.

Shell said that, subject to approval by European Commission competition authorities, the operation will start up on Nov. 1, 1997.

The Shell/BASF combine will have capacity to produce 1.4 million tons/ year of polyethylene.

BASF has also signed a memorandum of intent with BP Chemicals to build a world-scale acetonitrile purification facility alongside BASF's acrylonitrile plant at Seal Sands, Middlesbrough, U.K.