Bad news for the chemicals industry in the heart of NWE. The plan to build a propylene pipeline from Rotterdam / Antwerp to Marl had received the seal of official approval long ago, public money had already been made available and the first tunnel under the river Rhine in Cologne had been drilled. Then, at the very last moment, the company that had been established to operate the pipeline, EPDC, pulled out – see Plasteurope.com Web of 27.02.2007. If things stay that way, the polymer operations at big sites such as Geleen, Wesseling and Knapsack, Oberhausen and Marl will have to continue to do without an important piece of infrastructure for the future. The continuous flow of propylene to the area, which is urgently needed to remain competitive, will not happen. At the moment, that may not mean too much for the Ineos, Sabic Europe, Basell and Dow PP facilities, but it could mean a lot for their sustainable existence or future expansion.

The process can also been seen as an example of the profound change occurring in the European industry during the course of globalisation. When the future operating company EPDC celebrated its founding in 2000, 13 companies participated in it: Bayer, Borealis, BP, Celanese, Condea, DEA, Degussa-Hüls, DSM, Erdöl-Chemie, Elenac, Infraserv, Rütgers and Veba Öl.

Bayer pulled out for strategic reasons, Borealis for geographic reasons and Infraserv more for political reasons. Condea, Rutgers, Degussa-Hüls and Veba Öl are history, as are the relevant activities of BP, DEA and Erdöl-Chemie, which are now part of Ineos. The short-lived BASF/Shell jv, Elenac, has now been swallowed up by Basell.

The present stakeholders of EPDC are:

... BASF, Celanese, DSM, Ineos, Sabic, Sasol, Shell, Westgas

BASF and Shell have interests in propylene production in Moerdijk, one of the system´s possible feed-in points. Ineos is a purely finance-driven structure. Its strategy is to take over troubled operations in the traditional petrochemicals industry and make it profitable enough to pay back interest rates for the bonds offered to finance the purchase. Celanese, the subsidiary of a large, profit-oriented capital equity company, manages a number of residual petrochemical production lines and sites belonging to the former global company, Hoechst. DSM has sold all its olefin interests to Sabic Europe, but has remained in the consortium for geographic/political reasons, obviously – its corporate headquarters are located in Sittard/Geleen. The highly successful strategy pursued by Saudi-Arabian company Sabic is destined to make it the industry leader at the end of the day. The South African Sasol Group bought its way into the German petrochemical industry a few years ago with sites in Brunsbüttel, Marl, Moers and Herne. In parallel with this, Sasol became a shareholder of the ethylene network, ARG. So too did Westgas, a subsidiary of E.ON., the omnipresent energy company along the Rhine and Ruhr, of which Veba is now a part.

Initial speculation that the cancellation of the pipeline project could be part of a poker game for more public funding probably stems from the way of thinking of the more traditional companies that made up the original constellation. It is easier to believe the players involved in the project today when they say they are withdrawing because the pipeline is "uneconomical due to rising costs." Sentimentalities and regional commitments no longer count – or they have been transferred to the division now known as "local Corporate Citizenship." How seriously this is taken was demonstrated last year in Geleen, when Sabic calmly and resolvedly scrapped its plans to expand its PE production, despite having just had the necessary grants approved by the Dutch government.

It also counts little that any increase in public funding is no longer only a matter for the countries involved, but requires the approval of the typically slow turning EU mills. The customary game-playing is now a thing of the past, at least at an infrastructure level of this kind.

At the same time, regional and even European politicians must not overlook the fact that decisions of this nature send out a highly negative signal, namely that "It is not worth investing here." Attempts should at least be made to propagate a "postponed doesn´t mean abandoned" attitude, because steel prices will not always remain as high as they are now, and the olefin cycle will not always decline at the same time. But for the time being, it looks like we will just have to get our supplies from the Middle East.

Daniel Stricker