Ineos to Expand Norway Petchem Plant Capacity, Build Furnace

04.12.2013 -

Ineos is building a new furnace at its petrochemical plant in Rafnes, Norway as it expands capacity to use ethane made from U.S. shale gas it will store in a tank under construction at the site, the chemicals and refinery company said on Tuesday.

Swiss-based Ineos is building an ethane storage tank that will enable the plant to produce 570,000 tons per year of ethylene, a key substance in making plastics. The extra furnace will enable it to produce 620,000 tons per year.

The Norwegian plant, by the picturesque Frier fjord, currently houses 11 furnaces which process ethane gas and some oil-based liquids into ethylene. By the end of 2015 it will have built a 12th, Geir Tuft, the commercial director, told journalists at the site.

Tuft said that the company was spending around $160 million on building the tank, the furnace and import facilities.

The move, taking advantage of the availability of cheap shale gas now being produced in the United States, will enable Ineos to stop buying more costly propane and make it more profitable on a long-term basis.

"It's more than likely now that the plant will be here in 2030," Tuft said.

The Norwegian tank will be joined by one around twice the size at the plant owned by Ineos in Grangemouth, Scotland, the company said on Monday.

Industrial Relations

While a labour dispute at Grangemouth almost brought about the closure of the petrochemical plant and 210,000 barrels per day refinery there in October, managers and trade unionists at Rafnes said industrial relations are much better in Norway.

Magnar Bakke, the site manager at the Rafnes plant said there were aspects of Norway's industrial relations legislation, which requires union representation on the boards of the company that could help to avoid future disputes at Grangemouth.

"We have a very well-established approach here, if there are issues to resolve, we meet every week with the unions and try to resolve them," Bakke, who is a director at Ineos, said as he stood by the 40-metre high ethane tank under construction.

He said that the three year period during which Unite union members at the Grangemouth plant agreed not to strike, as part of a deal reached in late October, presented a good opportunity to reset relations there.

Unite also agreed to a three-year pay freeze and a cut in pension benefits as part of the deal to save up to 1,400 jobs.

During the Grangemouth dispute, both sides repeatedly said they were being misled by the other, and that the opposing side was not open to negotiation.

Union representative Wenche Tveitan at the Norwegian plant said the system that wrote union representation into decision-making from an early stage prevented disputes from escalating.

"The culture here is very different," she said. "The union, the workers and the company have a dialogue, which doesn't mean we agree with everything, but it means we are negotiating well."