The plastics industry in northwestern Europe has been dealt another heavy blow with the announcement by Ineos Group (Lyndhurst / UK; www.ineos.com) that it is to halt all further work on its planned investment in a new ethane cracker in Wilhelmshaven / Germany. This, says the company, is the result of recent discussions with Statoil and E.ON Ruhrgas – which were to supply ethane to the cracker. A sharp increase in investment costs, well over 30% in the last twelve months alone, had made the project economically unviable. Despite support from the city of Wilhelmshaven, the Lower Saxony state Government and the German federal government, the project has been cancelled.

The plans for the new cracker were based on feedstock supplied from a gas separation plant in nearby Dornum, to be built by Statoil and E.ON. This would also have involved investing in a new chlorine plant using membrane technology, as well as capacity expansions for the existing VCM and S-PVC units operated by Ineos on the same site. In addition, an ethylene pipeline had been on the drawing board to link Wilhelmshaven to the established ARG ethylene pipeline system in Marl. With the recent decision, these plans, too, have been abandoned.

"This is clearly a disappointing outcome for Ineos, the city of Wilhelmshaven and the state of Lower Saxony," commented Ineos chairman Jim Ratcliffe. "All parties have invested considerable resources developing their projects since the original agreement between the three companies was made in August 2005. It is unfortunate that the recent increase in the project-related material and labour costs has had such a significant impact on the project economics that it became unsustainable," he added. Ineos said that it remains committed to growing all its core areas and to further expansion in Germany.