Ineos has secured €3.5bn in financing to push ahead with a new energy-efficient petrochemical facility in Belgium, in a vote of confidence in a European sector that has been shaken by the energy crisis.
The company, run by Britain’s richest man, Jim Ratcliffe, plans to develop its “Project ONE” cracker in Antwerp – billed by Ineos as the biggest investment in European chemicals in a generation – even as rivals such as Germany’s BASF have announced they will downsize in Europe . “permanent” because energy costs are rising.
Ineos said the new facility, plans for which were first revealed in 2019, will remain economically viable as it will be one of the most energy efficient in the world and produce lower emissions than its rivals.
The company is confident that Europe’s petrochemical and manufacturing sectors can adapt to the energy crisis triggered after Russia cut gas supplies following its invasion of Ukraine, despite warnings that more capacity will go to Asia and the US.
“We believe in the future of Europe and the renewal of European industry,” said Jason Meers, chief financial officer of the project.
“The reason securing funding is so important is that we show that if you do the right thing with the right project, you can get support. The economics of the project are very good.”
The €3.5bn financing will come from 21 commercial banks and export credit agencies in the UK, Spain and Italy, along with a loan guarantee of up to €500m from Gigarant, part of the Flemish government.
The new cracker at Ineos’ existing Antwerp facility will convert cheap ethane – a byproduct of natural gas production – into ethylene, one of the most important raw materials used to make everything from food packaging to insulation.
Ineos has built a fleet of 16 tankers over the past six years dedicated to transporting ethane from the US to its plants in Europe, taking advantage of the lower feedstock costs created by the US shale boom.
“We’re taking the US energy economy and importing it to Europe,” Meers said. “That makes it very competitive.”
While European gas prices have fallen from their peak last summer, when they reached 10 times the historical average, they remain high compared to pre-crisis levels.
Ineos said the plant could be powered by low-carbon hydrogen within 10 years, with plans to make the fuel a bigger part of Europe’s energy mix.