Markets & Companies

A Visible Turning Point for Oxea

German Oxo Chemicals Producer Moves HQ, Invests to Improve Asset Base and Profitability

07.02.2017 -

Ten years ago, in March 2007, oxo chemicals producer Oxea was established as a buyout led by private-equity firm Advent International of oxo derivatives and oxo intermediates businesses from Celanese and European Oxo. In December 2013, Oman Oil Company (OOC) acquired Oxea from Advent. Following the decision of Oxea’s board to implement a new management structure, Dr. Salim Al Huthaili was appointed as the company’s chief executive officer in March 2016. He joined Oxea from Oman Oil Company in 2015 as chairman of the supervisory board and then became a member of the executive board. Dr. Michael Reubold asked Dr. Al Huthaili about his growth strategy for Oxea.

CHEManager: Dr. Al Huthaili, Oxea will celebrate its 10th anniversary in 2017. On time for this occasion, the company will move into its new headquarters in Monheim, Germany. Has Oxea grown out of its old head office?

Dr. S. Al Huthaili: Oxea has grown significantly over the past ten years both in terms of product range and sales volume. We have become one of the world’s leading suppliers of oxo chemicals. With production sites in Europe, North America, and Asia we are now a truly global company. While Oxea grew, the management and administrative departments slowly became divided over the site in Oberhausen, Germany, because of space constraints.

The new headquarter is the visible turning point for Oxea. My focus is to consolidate all functions in one headquarter with the intention of increasing communication between the teams and to foster idea generation. The new building that we constructed in Monheim offers our teams a much improved and state-of-the-art working environment compared to the scattered buildings we previously occupied. This move will present us with sufficient capacity for further growth in both Monheim and Oberhausen and it befits headquarters of a thriving company. Lastly, it will be much more energy-efficient than the old buildings, which also incurred relatively high maintenance cost.

What are your growth plans and what is your growth strategy for Oxea?

Dr. S. Al Huthaili: The future of Oxea depends on what we can do to invest in the future of the company. To continue as a sustainable and profitable business, we aim for selective growth in focus areas, further expansion of our portfolio and growth in volumes where opportunities are identified. A broader product portfolio will create more pull from the markets and generate further demand for our products.

We set up a substantial investment program for 2017 to improve our asset base and overall profitability. We are also investigating investment opportunities in Duqm, Oman. Oxea’s new strategy team pursues various growth activities that go beyond mere debottlenecking at our global production sites. We are looking at the advantages of each of our locations and how they can deploy our technologies to contribute better to the company. This encompasses strategies to maximize the production at our intermediates plants, and better utilize our chain of molecules and feedstock.

Regarding volume growth, in December 2016 we obtained the final investment decision for our propanol project in the USA. Our main focus otherwise is to fully utilize our existing capacities before the next major wave of investment. We continuously look for ideas to selectively grow our derivative business. Our marketing and global technology groups are continuously researching new products and applications.

Will Oman Oil Company’s access to competitive raw materials benefit Oxea’s growth?

Dr. S. Al Huthaili: Oxea is a technology driven company with a history of over 75 years. It is not heavily dependent on competitive raw materials, but rather competes through process excellence, be it in areas of safety, operations, commercial or other. Through commercial integration and long-term supply partnership, Oxea persevered. So I would like to think that we can continue to be competitive without raw material benefits. If we can find such opportunities, however, of course they would be welcomed and explored. The Duqm platform could also bring competitive advantages and add further value to our continuously improving performance.

We are for example working closely with other OOC affiliates such as Oman Trading International to identify such opportunities. We also draw on the expertise of group companies such as Oman Oil Refineries and Petroleum Industries Company - ORPIC - and OOC itself. Interesting ideas are being tabled to leverage on the scale of OOC and its affiliates.

OOC has a strategically favorable geographic location to serve as a gateway to the Asian market. Will Oxea be able to leverage this opportunity to develop further in the emerging markets in the East?

Dr. S. Al Huthaili: The Asian market can be served very conveniently from Duqm in the future. Big markets like India are practically next door and Oman’s history in sailing and trading connected continents like Asia and Africa through trade. Oxea continuously monitors the development and the demands of the Asian markets closely. Our own Nanjing, China-based plant has been converted from a project into an operational asset this year. The volumes continue to grow steadily. With Oxea’s global market reach and offices in Tokyo, Shanghai, and Singapore, the Eastern markets are very well covered already and will be in the future as well.

Do you also consider acquisitions in order to expand Oxea’s business into profitable growth sectors?

Dr. S. Al Huthaili: Oxea is a company that is oriented towards technical leadership and growth. Our target is to have a sustainable business model. Therefore we intend to expand our global market position whether through organic growth or mergers and acquisitions or a combination. If such opportunities arise, we will evaluate and take advantage of them. Oxea has sufficient experience, and in the past, we have been very careful to avoid the pitfalls that are inherent in M&A transactions.

When Oman Oil Company acquired Oxea three years ago, OOC said it wants to use the oxo chemicals platform to expand its own chemicals portfolio. Would you share some details on this with us?

Dr. S. Al Huthaili: Oman is mature in the upstream oil and gas space. However, the country’s downstream journey is relatively new. There are a few entities within the country and others such as Oxea internationally. Our sister company, ORPIC, is developing the first chemical cracker in the country. Plans and feasibility studies are being developed for a second mixed feed cracker in Duqm and a large space is reserved for Oxea’s products currently.

OOC plays an important role in the Sultanate's efforts to diversify the national economy. Does the fact that Oxea is the only 100 % owned asset in OOC’s investment portfolio indicate the strategic importance Oxea has for OOC and the Sultanate of Oman?

Dr. S. Al Huthaili: Oxea is one of the downstream pillars in OOC’s portfolio. It brings value in so many ways and despite the recent down cycle in the industry, OOC is very supportive to growing Oxea as one of the main focus assets for various reasons.

First, Oxea is a global player with an enormous market reach and commercial experience. OOC can leverage on Oxea’s market reach and we are jointly working with affiliates such as where feasible combining offices with Oman Trading International.

Second, Oxea’s strength in research and development can be a second pillar where OOC and affiliates can draw on Oxea’s experience. We already hold several thousand patents, many of them for key technologies, and continue to produce new patents at a constant and steady rate. This strong focus on R&D is a key differentiator that OOC is also looking to leverage on as a launch pad for developing a substantial R&D culture in Oman focused on growth and sustainability.

Third, Oxea with its tremendous technical and process knowledge serves as an important training platform for young engineers. Nine individuals from Oman are currently trained in Oberhausen. It is the idea that these future engineers will once hold leading positions in other Omani companies.

Prior to joining Oxea, you served as strategy and performance director for OOC’s downstream business and before that you led the Shell Chemicals Operations in the Middle East. How would you describe the Sultanate’s preconditions to develop its petrochemical assets and become a major chemical producer?

Dr. S. Al Huthaili: In the past, the Sultanate has focused on upstream oil and gas. However, the Sultanate of Oman is planning to have significant investments beyond upstream oil and gas activities and aimed to diversify the economy to make the country’s economy more resilient and create sustainable industry jobs. Oman is taking the right calculated steps towards developing a significant petrochemical platform. For instance, the new cracker at Duqm is only the second of its kind in the whole of the Sultanate. The first cracker is being developed by ORPIC in Sohar, in the north of Oman. These investments are very long term and expensive so planning and delivering such investments also takes a long time. I am very confident that in a few more years we will have significant petrochemical investments adding to the current solid assets we have in the country. The ingredients to develop a substantial petrochemical and industrial hub are all there. It is just a matter of time, in my opinion, before we see the current plans being delivered.

What is the role of Oxea’s employees in your new growth strategy?

Dr. S. Al Huthaili: Oxea’s biggest asset is its employees. Without our team, we would not produce or sell anything. My personal wish is to grow Oxea and to hire many more people as a result. However, this needs to be done sustainably. We are focused on having an economically sustainable growth model. I don’t look at Oxea having about 1,500 employees, but I think about the families that Oxea supports globally. My target is to make all employees, suppliers and customers proud of working with Oxea.

My communication with all employees has increased and I spent a significant effort to ensure that the messages are clear. This is giving a lot of confidence to the team, allowing more focus on delivery. The team has done a tremendous job in 2016 where we saw constant and continuous improvement on our results despite the uncertainty that was looming in Q1 2016. We are full of confidence and the team will deliver above expectations in 2017. Developing our employees and investing in people are key pillars to Oxea’s growth strategy.