Post on 26-Dec-2015
transcript
INEOS
9th June 2009 : Langesund
2
Agenda
Impact of the recession on European Petrochemicals
INEOS response to recession
INEOS & Skanled
Future plans for Rafnes
Impact of the Recession
4
OECD Composite Leading Indicator: May 09
UK USA
Euro Zone China
5
INEOS Overall Global Weekly Order Trend
250
300
350
400
450
500
1 6 11 16 21 26 31 36 41 46 51
4wm
a V
olu
me
(kte
)
2007 2008 2009
6
0
100
200
300
400
500
600
700
800
900
1000
01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009
Eth
yle
ne t
o N
ap
hth
a s
pre
ad
($/t
)
Ethylene: margin improvement becoming evident
BOC : Feb 09
7
Propylene: margin improvement becoming evident
0
100
200
300
400
500
600
700
800
900
01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009
Pro
py
len
e t
o N
ap
hth
a s
pre
ad
($/t
)
BOC : March 09
8
-200
-100
0
100
200
300
400
500
01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009
Ben
zen
e to
Nap
hth
a sp
read
($/
t)Benzene: margin improvement becoming evident
BOC : Feb 09
9
Butadiene: margin improvement becoming evident
-400
0
400
800
1200
1600
01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009
Bu
tad
ien
e t
o N
ap
hth
a s
pre
ad
($/t
)
BOC : April 09
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Pequiven (Venezuela) 400 KTe PVC 400 KTe EDC
Essar (India) 400 KTe Innovene G 400 KTe Innovene S 900 KTe Innovene P
BCPL/GAIL (India) 300 KTe Innovene G
Sinopec, Wuhan (China) 300 KTe Innovene S
Ineos Technologies: Major Licences won in 2008
SIBUR, Tomsk (Russia) 200 KTe Innovene P
Leshan (China) 150 KTe BiChlor
Braskem (Brazil) 200 KTe PVC 200 KTe EDC
Polimerica (Venezuela) 430 KTe Innovene G 400 KTe Innovene S
Example of Delays in new Plant Construction
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Pequiven (Venezuela) 400 KTe PVC 400 KTe EDC
Essar (India) 400 KTe Innovene G 400 KTe Innovene S 900 KTe Innovene P
BCPL/GAIL (India) 300 KTe Innovene G
Sinopec, Wuhan (China) 300 KTe Innovene S
SIBUR, Tomsk (Russia) 200 KTe Innovene P
Leshan (China) 150 KTe BiChlor
Braskem (Brazil) 200 KTe PVC 200 KTe EDC
Polimerica (Venezuela) 430 KTe Innovene G 400 KTe Innovene S
Delayed min 1 year,
financing/m
arket Payments delayed,
6 months, b
anking
issues
Payments delayed,
6 months, b
anking
issues
Delayed min 1 year,
financing/m
arket
Payments delayed,
4 months, b
anking
issues
Delayed min 1 year,
financing / m
arket
Few untouched by financial crisis
Ineos Technologies: Major Licences won in 2008
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OPAL, ONGC (India) 1,080 KTe Innovene G 340 KTe Innovene P
CNOOC (China) 400 KTe Innovene S300KTe Innovene G400KTe Innovene P
Ineos Technologies: 2009 Licencing Opportunities
Rosneft (Russia) 250 KTe Innovene P320KTe Innovene S
Sonatrach/Total (Algeria)450 KTe Innovene G
Unipetrol (Czech)250 KTe Innovene S200KTe Innovene P
Yanchang (China) 300 KTe Innovene S300KTe Innovene G300KTe Innovene P
Azerchimia (Azerbaijan) 400KTe Innovene S
TBC (Egypt) 900 KTe Innovene G
Salavat, Sibur (Russia) 300 KTe Innovene P500KTe Innovene G
Chimprom (Russia) 135 KTe BiChlor
35KTe PVC
China8 x 100KTe BiChlor
Miandoab (Iran) 200 KTe BiChlor
300KTe VCM300KTe PVC
Thai Plastic (Thailand)350KTe EDC
BASF (Germany)250 KTe EDC Jiangshan (China)
80 KTe MAN
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OPAL, ONGC (India) 1,080 KTe Innovene G 340 KTe Innovene P
CNOOC (China) 400 KTe Innovene S300KTe Innovene G400KTe Innovene P
Ineos Technologies: 2009 Licencing Opportunities
Rosneft (Russia) 250 KTe Innovene P320KTe Innovene S
Sonatrach/Total (Algeria)450 KTe Innovene G
Unipetrol (Czech)250 KTe Innovene S200KTe Innovene P
Yanchang (China) 300 KTe Innovene S300KTe Innovene G300KTe Innovene P
Azerchimia (Azerbaijan) 400KTe Innovene S
TBC (Egypt) 900 KTe Innovene G
Salavat, Sibur (Russia) 300 KTe Innovene P500KTe Innovene G
Chimprom (Russia) 135 KTe BiChlor
35KTe PVC
China8 x 100KTe BiChlor
Miandoab (Iran) 200 KTe BiChlor
300KTe VCM300KTe PVC
Thai Plastic (Thailand)350KTe EDC
BASF (Germany)250 KTe EDC Jiangshan (China)
80 KTe MAN
Delayed,
min 1 year
Delayed
min 6 m
onths
Delayed,
min 6 mths
Delayed,
min 1 year
Delayed, min 1
year, financing
Delayed,
9 month
s
Delayed,
min 1 yearDelayed,
min 1 year,
financing
Significant delays across most projects
INEOS Response to Recession
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Cost Management
10% Reduction in fixed costs during Q4 2008
Further 10% reduction in fixed costs for 2009
Pay freeze across organisation
Bonuses cancelled for 2009
Dividends cancelled for 2009
Contractors reduced by 26% in Q1 09 versus Q4 08
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Cash Management
Capital expenditure reduced from €600m in 2008 to €250m in 2009
Capital spend limited to essential items
Stock volume reduction
Stocks reduced by 22.5% in Q1 09 versus Q4 2008
Cash release from stocks of €317m
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Q1 Financial Performance
EBITDA in Q1 2008 was €420m
EBITDA in Q1 2009 was €200m
Operating cashflow of €428m
Net cash inflow after financing charges in excess of €100m
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Q1 2009 Industry Performance
Major decrease in financial performance across the sector
INEOS EBITDA Q1 09 = €200m Q1 08 = €420m Reduction = 52%
•Determined from Financial Statements Q1 09•Considers Chemical Business Activities only as appropriate
EBITDA Changes Q1 09 vs Q1 08*
-150 -100 -50 0
Chevron Phillips
Westlake
Braskem
Bayer
Dupont
INEOS
PolyOne
Dow Corning
BASF
Hexion
Georgia Gulf
Lanxess
Huntsman
PPG
LyondellBasell
Momentive
SABIC
Dow
NOVA
Percentage Reduction Q1 09 vs Q1 08
INEOS and Skanled
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Original Concept for INEOS
Skanled pipe comes through Grenland
INEOS constructs and operates a Gas Separation Plant to extract … Ethane from dry gas Additional Ethane spiked into gas flow at Karsto
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Cancellation of GSP
INEOS decided in January that the GSP project could not work
Return on Investment was very poor
World ethylene demand had collapsed further undermining the investment
INEOS cash availability was limited
Could not secure long term agreements for economic gas supply
22
Revised Skanled Scope
Branch line to Grenland
Would allow Yara to consume dry gas and release the ethane currently used by Yara
INEOS would use the Yara ethane to expand the cracker at Rafnes (+150kt NGL)
€70-75m investment in cracker expansion
Future Plans for INEOS in Grenland
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The INEOS Cracker
Yara ethane expansion option not available without Skanled
Expansion based on additional LPG’s s feasible and will be the subject of further study
Expansion will need to be timed with recovery in European ethylene demand
INEOS still believes that the best option for the Rafnes cracker is a significant expansion based on additional ethane
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Additional Ethane
Ethane is a valuable chemical feedstock
It should not be exported from Norway for fuel use when significant value can be added within Norway
The challenge is to find ways to economically extract ethane from the dry gas system
We believe that Norway can have a highly competitive petrochemical industry if a solution can be found to the ethane issue
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INEOS ChlorVinyls
Securing feedstock for the Rafnes cracker opens the way for further expansion in ChlorVinyls chlorine/EDC in addition to cracker expansion
BUT
We need more confidence in the long term supply of economic power to Grenland
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Long Term Power
INEOS in Grenland is a large consumer of electricity, ~1,3 TWh annually
Electricity is a raw material and an important part of production costs
Final products are mainly exported and competition is global
Access to competitive, long-term power contracts is a key issue for investments
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The Power Challenge
INEOS is partially covered by long term contracts to 2015
No long term contracts in place after 2015
Similar to many power intensive users in Norway
Need to secure competitive, long term contracts within current market framework
Indirect carbon costs increase power price (even for CO2 free generation)
Illiquid market for long term contracts of 15-20 years
Extensive up front guarantees required
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Summary
INEOS remains very committed to Grenland
Still seeking expansion options across our businesses
Need competitive long term power supplies
Opportunity for Norway to add significant value to Norwegian ethane in Grenland