"Disappointed" by the failure of the APPE ethylene restructuring project (see Plasteurope.com No 01, 1994), BP Chemicals Ltd (HQ: Britannic House, 1 Finsbury Circus, GB-London EC2M 7BA) has decided to go it alone and close its loss-making 335,000 naphtha cracker at Baglan Bay / South Wales. Some 600 jobs will go and the cost of the closure, together with other minor restructuring moves which have not yet been announced, will be £ 200m. Giving the background and reasons for the decision, Stephen Pettit, chief executive-petrochemicals at BP Chemicals, said that the Baglan Bay cracker was rated one of the most expensive in the industry and had made losses of "Tens of millions (££) in 1992 and 1993. Closure reduced BP's overall ehtylene capacity from 1.5m t to about 1.2m – but the remaining crackers, at Grangemouth / Scotland, Lavera / France and BP's share of a cracker at Wilton / England were in the top quartile of cost-efficiency in Europe.

The cracker of Erdölchemie / Germany (BP's joint venture with Bayer AG) is within the top half of European efficiency, added Pettit – but he declined to make any comment on the forthcoming review by the partners of the polyethylene plant.

The decision would not have any implication for plastics production or costs – but many more moves must be still made before these can return to profitability, he said. The Baglan Bay site will now be dedicated to production of oxygenated solvents (which are more friendly to the environment), where BP is one of the leading world producers and No 1 in Europe. The move also secures BP's position in styrene (and polystyrene) – but the company said that the discussions with EniChem on forming a joint styrene/PS venture were still "on hold".

BP's decision to go-it-alone follows soon after the collapse of the plan sponsored by the Association of European Petrochemicals Producers (APPE, Av. E. Van Nieuwenhuyse 4, B-1160 Brussels), under which member companies would each contribute at a rate of DM 30 per t of installed capacity into a fund which would finance shut-downs by individual companies. Ironically, if the BP closure had taken place under the plan, BP would have gained more from the APPE fund than it would have contributed.

BP estimates that European overcapacity in ethylene is about 1.5m t. There are 6-8 small plants which the company believes ought to be closed, accounting for about 800,000 t. Pettit hoped that the move by BP would prompt other producers to make their own closures – but he confessed that he doubted that this would happen ...

READER SERVICE: BP Chemical press release with two graphs "Cash costs for ethylene in West Europe" / "Oxygenated Solvents manufacturing capability" (BP): PIE-No. 35375.