Ineos’ £1 Billion UK Spending Includes VAM
Ineos has selected its Hull, Saltend, UK, site as the location for its long planned 300,000 t/y vinyl acetate monomer (VAM) plant, which will cost £150 million and form part of a just announced £1 billion investment in its British asset base.
Within the investment package, the Swiss-headquartered group’s largest single project will be a £500 million upgrade of the 500-km Forties Pipeline System it acquired from BP in 2017. The four decades old pipeline system carries around 40% of the UK’s oil production and eventually supplies the Petroineos refinery at Grangemouth, Scotland, in which PetroChina holds a 49.9% stake.
The aging facility has been in need of repair for some time. Shortly after Ineos bought it, a crack was discovered, forcing a three-week shutdown. Also for some time, Ineos has been planning to modernize energy supply at Grangemouth. The already begun investment in a new steam and power plant is expected to swallow £350 million in funding.
The power plant being built by US engineering contractor Fluor will replace an existing power station, which is also 40 years old. High pressure steam produced in the new plant will be used by production facilities at the Scottish site, Fluor said.
The industry association Oil & Gas UK called the Ineos investment plan “a vote of confidence” in UK industry.
Since announcing the VAM project in spring 2018, Ineos has been playing a guessing game about where its plant would be built, following months of silence on whether a new plant would be built at all. In 2013, the group shuttered an existing plant at Hull, also acquired from BP, saying its high production costs made it was uncompetitive.
Ineos had suggested that the VAM plant could be built either at Hull or Antwerp – it has ethylene hubs at both locations. Director Tom Crotty said in July last year that construction would be financed from its own cash flow, but acknowledged talks with the UK Department Business, Energy and Industrial Strategy about investment aid.
“Any help would tilt the scales in favor of Hull,” Crotty was quoted as saying said at an industry forum on Brexit.
This week’s announcement of the UK investment scheme was seen by some as an attempt to smooth the waters after the flap over plans by Ineos chaiman Jim Ratcliffe and the privately owned group’s two other shareholders to move their domicile to Monaco to save tax.
Ineos executives commenting on the new plans stressed that the group believes in the future of manufacturing at an “uncertain moment” in the country’s industrial life. Graham Beesley, CEO of Ineos Oxide, which will run the VAM plant, said the investment will boost exports from the UK to Europe and the rest of the world.
In a recent letter to EU Commission president Jean-Claude Juncker, Ratcliffe said “nobody invests in Europe” anymore because of its high “green taxes.” An analysis by UK newspaper The Guardian, however, showed that the group had received some £155 million in investment incentives from EU countries between 2016 and 2018.