GROWTH, SUCCESSES AND - ANNIVERSARY SPECIAL - Ineos
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
GROWTH, SUCCESSES AND NEW HORIZONS ANNIVERSARY SPECIAL Chemical major celebrates 20 years and looks to the future Challengers for the America’s Cup 2021
20TH ANNIVERSARY STRATEGY
BUILDING
was simple: to find unloved assets, invest
in their facilities, lower the cost base and
rejuvenate them. The formula was to
prove hugely successful - the acquisition
of non-core businesses from chemical
majors including Dow, Dupont, ICI,
A LEGACY
BP and BASF helping INEOS achieve
phenomenal growth. The foundations
were laid and momentum was building.
The purchase of the acrylics business
in 1999 and chloralkali business of ICI
in 2001 had now propelled INEOS to the
second largest chemicals manufacturer in
the UK. It had sales of around £1bn and
around 2,500 employees – one of whom
was Tom Crotty, now INEOS’s director of
public affairs.
“I think the fact we were a private
company really made a difference,” notes
Crotty. “Petrochemicals is a cyclical
business and we were always able to take
the long view; we’re not beholden to
shareholders or analysts looking at our
quarterly results.
“Early on, we developed a system
for managing our businesses that
we’ve applied consistently. It’s a simple
approach where we integrate new
businesses into the group and apply a
very straightforward focus on costs.”
With more than 20,000 employees spread across 171 sites Each business operated independently
and had its own board – a rarity for a
in 24 countries, and sales in excess of $60bn, INEOS has large petrochemical producer, he notes.
clearly come a long way since its humble beginnings “We have a very decentralised
structure that means we don’t carry the
overheads that are typical for a company
of our size. Every business is responsible
T
rying to choose a single defining Above - In just corner with INEOS,” says Ratcliffe. “Last for itself and that avoids having
moment in the history of INEOS two decades, year was tremendously successful - one of unproductive spend. It also makes us
is no mean feat. It could be the INEOS has grown our most active and profitable. We’ve had much more agile and efficient.”
to become one
acquisition that literally tripled the size of of the world’s record profits of $7bn, record turnover of Just a few years in and INEOS was
the business overnight, or when it emerged largest chemical $60bn, 85% of our businesses beat budget, growing rapidly. Yet it was the move to
from the worst economic downturn in companies 50% of our businesses beat their all-time buy Innovene, BP’s olefins, derivatives
history with the renewed confidence of records, and we have five businesses at, and refining subsidiary, for $9bn that
its investors and support of the banks. or approaching, $1bn of EBITDA. We’ve really took the business to the next level.
Perhaps it was the tense negotiations never seen numbers like that.” The deal in December 2005 instantly
with the unions as it saved its ailing Ratcliffe’s background in chemical positioned INEOS among the world’s
Grangemouth facility, or its $1bn plan to engineering and a stint in venture capital leading players, creating a combined
build a fleet of tankers capable of crossing paved the way for the management buyout business with a turnover of around
the Atlantic full of low-cost feedstock. of Inspec - the business he helped found - $33bn, with 68 manufacturing facilities
All have been significant – each an and on 4 May 1998, INEOS was born. capable of producing over 30m tonnes
important part of the jigsaw which has The name was a portmanteau, an of petrochemicals.
helped establish INEOS as one of the amalgam of two words from Latin and Ratcliffe admits it was a major
world’s leading chemical companies. Greek that roughly translate as “new milestone. “We gambled somewhat
In the space of just two decades, dawn” or “beginning”. but you’re only going to get one
INEOS has become a major The philosophy of the new business opportunity like that in your life. It
manufacturer of petrochemicals, specialty
chemicals and oil products. Today, it is “You never know what’s around the corner with INEOS.
ranked the world’s fourth largest chemical This year has been tremendously successful - one of our
company in terms of sales, among the most active and profitable”
Top 10 oil and gas operators in the North
Sea, and its chairman Jim Ratcliffe now
heads the UK rich list.
“You never know what’s around the Jim Ratcliffe, Chairman, INEOS
2
was transformational for INEOS. It venture with PetroChina to become Before long, INEOS had cemented its
transformed us from being a very serious known as Petroineos. position as a Top 10 player in the North
chemical entity to being one of the very That same year, plans were unveiled Sea with the addition of the oil and gas
largest chemical entities worldwide.” about the formation of a new styrenics assets from Denmark’s DONG Energy,
Yet with the highs come the lows, JV with German major BASF. The new gaining access to three major fields in
and shortly afterwards in 2008, the venture would be called Styrolution, with Norway, Denmark and Shetland.
global economic downturn sent anticipated annual sales of around €5bn. “It was fortuitous that we were in the
shockwaves throughout the industry It would combine their global business right place at the right time to make
and hit INEOS hard. activities in styrene, polystyrene (PS), these acquisitions. It worked well for us,”
As the oil price lurched from $140/ acrylonitrile butadiene styrene (ABS), says Crotty. “Many of the assets were
bbl down to $40/bbl in the space of styrene-butadiene block copolymers (SBC) quite new – and of very high quality.
six months, it stripped value from the and other styrene-based copolymers. We brought in some very good people
business and triggered several banking Yet it was perhaps another and that gave us a lot of the subsurface
covenants, forcing some tense discussions development in 2012 that most took the expertise we were looking for.”
with lenders. Over the next 12 months, industry by surprise. This was soon followed by the
the banks took €846m from the company With the US riding the shale wave and acquisition of the Forties Pipeline System
in fees and penalties. North Sea gas supplies waning, INEOS (FPS) from BP – a 235-mile link between
“It didn’t change the way we’d run wanted to test the water and see whether 85 North Sea oil and gas assets and the
our business but it was a turning point those advantaged feedstocks could be mainland that delivered almost 40% of
in the way we related to our lenders,” transported from the other side of the the UK’s supplies.
notes Crotty. “When the downturn hit, Atlantic over to European shores. With more of its assets UK based and
our EBITDA halved overnight and we Not for the first time in INEOS’s the government now far more supportive
could see we were about to trigger some history, some said it was impossible. They of business, INEOS decided to move its
of our banking covenants. It wasn’t a cash were wrong. “At INEOS, we headquarters back to Britain in 2017.
problem but an accounting problem.” The $1bn project would see a fleet never rest on our There has since been more expansion
To resolve the situation, difficult of purpose-built ships transport ethane laurels. When we and investment, including a commitment
negotiations started with a consortium from the US to INEOS sites in Norway achieve a target, to increase the capacity of its existing
of over 230 banks and investors, and and the UK - a 3,800 mile (6,116km) we always look crackers. It also unveiled some other,
eventually a new five-year business plan “virtual pipeline”. slightly less conventional, plans too.
ahead to the next
was drafted. It was to be a real sea change for Ratcliffe and his team not only
one – and that’s
“We wanted to get all the lenders the company, helping to transform its took their first tentative steps into the
together in London and New York so we existing crackers into some of the most
what keeps automotive industry with the development
could talk to them face to face,” he says. “We competitive in Europe. us hungry” of its own off-road vehicle in February
wanted to tell them how about our business “We also saw our Dragon Ship concept 2017, but INEOS also acquired British
works and how we planned to get out of as the perfect opportunity to really dig clothing brand Belstaff a few months
the downturn really quickly. Banks don’t Grangemouth out of a hole,” concedes Tom Crotty,
later in October, bought a football club
usually work like that but Jim insisted.” Crotty. “At that point, the union had Director of public in the Swiss league in November, and
It paid off and INEOS succeeded in refused to engage in negotiations, we affairs, INEOS sponsored Sir Ben Ainslie’s America’s
renegotiating all its debt to levels that were were running the cracker at half rates Cup sailing team in April 2018.
better than before the downturn, he adds. because we didn’t have enough ethane, Yet despite this eclectic mix of projects,
“It worked so well that we’ve done it and our pension costs had risen to 50% of it was a more traditional announcement
every year since to tell all our lenders salary. We needed to see changes to make that really dominated the headlines.
exactly what we’re doing. That’s meant the site viable again.” For the first time in two decades, an
that since 2009, ours has been one of Fast forward to 2015 and the group entirely new cracker would be built in
the most favoured pieces of debt in the was going from strength to strength – Europe – and INEOS was behind it.
industry – and whenever we’ve needed and was breaking into some exciting new Ratcliffe labelled it a “game changer” –
to raise money we’ve been able to do it markets too. a €2.7bn project that brings a new ethane
almost instantaneously.” “The most obvious sector for us to cracker and propane dehydrogenation
It also marked the start of a new era for branch into was oil and gas,” says Crotty. (PDH) plant to the region. It is, by far,
INEOS - a time of renewed investment “We saw very competitive valuations the company’s single biggest capital
and ambition. in the North Sea and recognised it was investment ever.
There followed a hive of activity in in the same position as petrochemicals It is not the first time that INEOS has
2010 when the company really set out was 20 years ago – there were many taken the industry by surprise, and it will
its stall for its future. Still reeling from ageing assets owned by companies not be the last – but it certainly makes
the effects of the recession, it asked that were happy to sell. We therefore choosing a single defining moment in the
for – but was refused – a one quarter looked at whether we could apply the company’s history that little bit tougher.
deferral on its VAT bill. It decided to same approaches of asset care and cost In the space of 20 years, the group has
relocate its headquarters from the UK to management to what are essentially flourished – never afraid to take a risk,
Lausanne, Switzerland. While it remained chemical plants at sea.” break new ground or push the boundaries.
committed to its UK operations, the In one of the most ambitious moves “At INEOS, we never rest on our
potential tax savings from a move abroad to date, INEOS gained a foothold in laurels,” insists Crotty. “When we achieve
were significant. the upstream energy industry with the a target, we always look ahead to the next
In January 2011, INEOS announced purchase of the DEA UK North Sea gas one – and that’s what keeps us hungry.”
a new trading and refining joint fields in 2015 to create INEOS Breagh. by Andy Brice
3
20TH ANNIVERSARY TIMELINE
Founded on 4 May after Buys Chlor Chemicals, Fluor and Silicas businesses
management buyout of Purchases from ICI, as well as Dow’s ethanolomines and gas
Inspec and acquisition of ICI’s acrylics treatment businesses, Degussa’s phenol business
a former BP site in business and a majority stake in EVC
Antwerp, Belgium
1998
Acquires Innovene from BP for
$9bn, transforming INEOS into
one of the world’s largest
2002 1999 chemical companies. Buys BASF’s
polystyrene business in the US
2001
The Oxide, Fluor,
Silicas and Phenol
businesses are Restructures Innovene and forms
combined to form INEOS Nitriles, INEOS Olefins,
INEOS Group INEOS Olefins & Polymers USA, 2005
INEOS Oligomers, INEOS
Polyolefins, INEOS Refining and
INEOS Technologies
Acquires 51% of ABS
business from LANXESS,
and the polyolefins 2006 Successfully
business from Borealis
renegotiates
financing with
2008 lenders and
2007 secures future
Global economic downturn triggers
several banking covenants and leaves
2010
INEOS facing tough negotiations with the
banks. Agrees Seal Sands, VAM, ethyl
2009
acetate and chlorvinyls purchases
Moves headquarters
to Switzerland
THE EVOLUTION
OF INEOS
Finding the right chemical formula
T
he past two decades have seen INEOS ever-changing regulations and environmental
establish itself as one of the world’s obligations, the business has continued to break
largest chemical companies and a new ground and seize opportunities.
significant player in the oil and gas sector – Proud to be recognised as a standard bearer
with a leadership team that is never afraid of a for manufacturing and best practice, INEOS is
challenge. now embarking on a period of unprecedented
Despite an increasingly competitive investment – just one of many major landmarks in
marketplace, tough economic conditions, and the company’s 20-year history.
4
Announces new trading and refining JV with First shipment of ethane from US to Europe
PetroChina, to be called Petroineos. Forms using purpose-built vessels - part of a $1bn
Styrolution, a 50:50 styrenics JV with BASF project. Moves headquarters back to the UK.
Buys Solvay’s stake in INOVYN
Grangemouth facility restarts after
strike. Agrees survival plan and
additional investment to ensure site’s
long-term future
Buys Sasol’s solvents business, along
with remaining shares of Styrolution
Makes waves in the
North Sea by buying
2011 assets from DEA
2013 Group and Fairfield
Energy. Forms INOVYN
2014 JV with Solvay
2015
Buys assets from Dong Energy to become Top 10 oil and gas
company in the North Sea. Agrees to buy Forties Pipeline System
and Kinneil Terminal from BP. Diversifies business with Projekt
Grenadier and development of 4x4 off-road vehicle, acquires
clothing brand Belstaff and buys Swiss football club, Lausanne
2016
Forms INEOS TEAM UK and invests £110m to challenge
2017
for the America’s Cup. Announces €2.7bn investment in
Europe and region’s first new cracker in 20 years
2018
5
20TH ANNIVERSARY CHEMICALS
Growing from
Strength to strength
INEOS is undertaking a massive expansion programme
across the business, with flexibility, security of supply and
enhanced competitiveness the major drivers
I
NEOS has entered its third decade increase the capacity of its crackers at INEOS Oxide is pressing ahead with
of business in a stronger position Grangemouth in Scotland and Rafnes several expansions. A sixth alkoxylation
than ever before. No stranger to in Norway. unit in Antwerp, Belgium, is due to
making bold decisions, the company Despite the additional output from start up at the end of 2018, along with a
has recently announced the largest these projects, Ingram says INEOS will 2,000 tonne expansion of ethylene oxide
investment in its history. remain a major buyer of olefins to fulfil (EO) storage capacity at the site. Beesley
In July, INEOS announced plans a sizable shortfall in European balances. says the company is also upgrading EO
to spend €2.7bn to build a new “We have to invest to support our production at Lavera, France, to support
petrochemical complex in Europe, “We have to derivatives business and our customers in the growing EO need in Europe.
with a world-scale cracker – the first invest to support Europe. These investments enable us to Beesley’s eyes are also currently turned
new cracker to be built in the region look to the future,” he says. to the US where INEOS Oxide plans to
for more than 20 years – and a propane our derivatives As well as the cracker projects, INEOS build an EO and derivatives facility on
dehydrogenation (PDH) unit. This business and has strong plans for the downstream the Gulf Coast. It anticipates an initial
investment has only been made possible our customers businesses, which will consume the new EO capacity of 270,000 tonnes/year with
because of the group’s $2bn investment output. INEOS Oxide CEO Graham start-up in 2022.
in its Dragon ships, which has created a
in Europe. These Beesley says the group’s growth strategy “Our USA project is a big step out
proven and reliable virtual pipeline across investments is centred on building up its derivatives for INEOS Oxide and will replicate the
the Atlantic to import huge quantities of enable us to look output, for which it will need upstream business model of Antwerp,” he says.
shale-based ethane and LPG from the US. feedstocks such as ethylene and Beesley envisages an “EO campus”, where
to the future”
With regard to locations for the new propylene. “All of this helps to improve the company will invite third parties
investments, Rob Ingram, CEO of INEOS our offering of derivatives to the market onto the site to construct their own
Olefins & Polymers Europe, says the and to increase the value add of our derivative facilities and take EO direct
company is focusing on a coastal site in company,” he says, adding that INEOS by pipeline. EO will also be for broader
northwest Europe and there are a number Rob Ingram, has been putting a lot of growth into sale in the region and INEOS Oxide
of different factors that will influence CEO, INEOS Olefins & derivatives that consume ethylene and will construct a number of its own EO
the final choice. These include feedstock Polymers Europe propylene in particular. derivative units on the site. Several sites
accessibility, the ability to connect to
downstream derivatives production,
including connectivity to northwest SUSTAINABILITY SUCCESS FOR VINYLS
European pipeline systems, and local
government support. The devil can take many July 2016 when INEOS key challenges for PVC:
Both projects will be developed in forms and back in the took full control, has been controlled loop management;
parallel and take four to five years to late 1990s it was polyvinyl a major driver of the PVC organochlorine emissions;
build. Ingram says INEOS is aiming to chloride (PVC), according industry’s efforts to improve the sustainable use of
make an announcement on site selection to Greenpeace. The NGO’s its environmental footprint. additives; sustainable energy
by the fourth quarter. campaign to completely Jason Leadbitter, head of and climate stability; and
Gerd Franken, chairman of INEOS phase out PVC spurred the sustainability at INOVYN, says sustainability awareness.
Olefins and Polymers North, says: “These industry to come together the company has invested Leadbitter says VinylPlus
world-class assets will increase INEOS’s and make a voluntary some €30m in this regard. has a target to recycle
self-sufficiency in all key olefin products commitment to address VinylPlus is the latest 800,000 tonnes/year of PVC
and support the growth of our derivatives some major environmental programme in place and in Europe by 2020. This
and polymer businesses in Europe. All concerns. The first initiative, builds on the targets met compares with the target set
our assets will benefit from our ability to Vinyl 2010, was launched in under Vinyl 2010. It is under Vinyl 2010 of 200,000
import competitive raw materials from October 2000. based on a system devised tonnes/year. According to
the US and the rest of the world.” INOVYN, formerly a joint by NGO The Natural Step, Recovinyl, the recycling arm
INEOS is also planning to further venture with Solvay until and has identified five of VinylPlus, nearly 640,000
6
and connections will allow the plant to are building the world’s largest single-train
be highly efficient, with raw material low-viscosity PAO unit,” says Joe Walton,
integration into the refinery and cracker CEO of INEOS Oligomers. Feedstock will
complex, and access to the Marl harbour come from the adjacent 420,000 tonne/
inland waterway connection. year linear alpha olefin (LAO) plant, which
“This is an important feedstock is also under construction and due to start
investment for our European business. up in the first half of 2019.
It shows a clear commitment by INEOS INEOS’s expansion programme is not
to its phenol business,” says Hans Casier, “This is a really just confined to adding capacity. INEOS
CEO of INEOS Phenol. “The Marl big expansion has been spreading its trading wings and
Chemiepark has been selected as the of our entered the energy markets as of 5 July
best location to build a state of the art, 2018. David Thompson, CEO of INEOS
capabilities,
world-scale cumene unit with excellent Trading & Shipping, says a first step was to
logistics that will underpin our phenol
working with take over the gas supply from its business
Significant investment is
and acetone sites in Europe.” gas from our in the Western Shetlands part of the North
planned in the coming years
Across the Atlantic, INEOS Olefins & fields and Sea. The company will be trading all of its
Polymers USA is actively adding capacity. we will look own oil and gas business from 1 October.
Following the successful start-up of its to add value “This is a really big expansion of our
are being considered and confirmation joint venture high density polyethylene where other capabilities, working with gas from our
of the location and technology partner is (HDPE) plant with Sasol in LaPorte, opportunities fields and we will look to add value where
expected later in 2018. Texas, the company is looking to see how exist” other opportunities exist, for example in
Other INEOS Oxide projects include much more it can get out of the 470,000 transportation,” says Thompson.
expansions of propylene oxide (PO) tonne/year plant. “There is enough in He adds that as a large consumer of
and dipropylene glycol (DPG) in the design to get a bit more capacity. We gas, the company may have opportunities
Cologne, Germany, as well as significant are very confident to push that unit a bit David Thompson, to optimise its own supply and demand
investment in coming years in ethylidene more,” says Mike Nagle, CEO of INEOS CEO, INEOS Trading needs, ultimately reducing the volumes it
norbornene (ENB) capacity. A major Olefins & Polymers USA. & Shipping buys from third parties.
debottleneck will be on stream in Nagle adds that the business is looking A new butane storage tank, which
Antwerp in 2019, followed by a proposed at other PE debottleneckings but he will allow INEOS to import the gas from
second worldscale ENB and C5 feedstock believes the Gemini plant presents the the US and supply its plants in Cologne, is
plant at a new location to be decided. quickest and most cost-effective way of due to open in 2019 in Antwerp. It will
Beesley adds that progress continues adding capacity. also provide INEOS Trading & Shipping
to be made on a project to produce The company has started work on an with options to trade butane in Europe, and
vinyl acetate monomer (VAM), either in ethylene expansion at Chocolate Bayou, potentially later extend supply to its site
Antwerp or at Hull in the UK. Texas - due onstream in 2020. It is also in Lavera in the future.
Meanwhile, plans are also underway pursuing a series of polypropylene (PP) INEOS has cogeneration units on its
to build a world scale cumene plant at debottleneckings. To date, about 45,000 sites that Thompson says will yield more
the Chemiepark in Marl, Germany. It is tonnes/year of PP has been added to its chances to optimise its energy purchasing.
due to be completed in 2020 and access US network with another 55,000 tonnes/ He says INEOS will start looking at power
existing pipeline connections between year due online in 2020. trading sometime next year.
INEOS’s phenol acetone production site INEOS Oligomers is building a 120,000 In another world first, INEOS will
in Gladbeck, the Evonik Chemiepark in tonne/year polyalphaolefin (PAO) plant supply US ethane from shale gas to China.
Marl, and the BP refinery and cracker at Chocolate Bayou, scheduled to go The company signed a long-term supply
complex in Gelsenkirchen. Its location online in the third quarter of 2019. “We agreement with China’s SP Chemicals,
which includes the construction of two
very large ethane carriers (VLECs). The
first vessel is due for delivery in the first
quarter of 2019, with the second following
tonnes of PVC was recycled pyrolysis that breaks down recycling under new EU by the end of 2019.
in 2017. the molecules into chemical rules that were adopted on SP Chemicals is building a cracker
Although mechanical components and feedstock is 16 January 2018. in Taixing to produce 650,000 tonnes/
recycling of PVC is now very interesting and attractive Separately, INEOS is also year of ethylene with commissioning due
well established, with the for the INEOS group. He looking at chemical recycling in 2019. Thompson says the agreement
necessary collection and adds, however, that the in its styrene/polystyrene (PS) gives INEOS flexibility in supplying and
sorting infrastructure largely challenge is “significant and business. INEOS Styrolution trading in the Far East.
in place across Europe, the cannot be underestimated”. signed a memorandum of Never before has it embarked on
next challenge is to develop Leadbitter says INEOS understanding in April 2018 such a number of projects to enhance
chemical recycling. “The and the vinyls industry with Agilyx Corporation to its feedstock flexibility and security
real Holy Grail is in chemical have shown that voluntary convert post-consumer PS of supply, and grow its downstream
recycling, which is a much commitments do work and waste back into styrene business. Be in no doubt that INEOS
more challenging nut to represent an opportunity feedstock. Another deal was is investing heavily to secure its
crack,” says Leadbitter. “A for other polymer done in November 2017 to competitiveness for a long‐term future,
high-temperature process producers that are now support Pyrowave’s North and for whatever may lie ahead.
such as gasification or facing tight timescales for American PS recycling project. by Elaine Burridge
7
20TH ANNIVERSARY OIL & GAS
BUSINESS LOOKS
TO THE LONG TERM
Ambitious expansion and exploration plans have given
INEOS Oil & Gas every reason to be optimistic for the future
each to focus on its core activities.
The businesses are INEOS Oil & Gas
Denmark; INEOS Oil & Gas Norway;
INEOS Oil & Gas UK, which consists of
the Breagh assets and those mainly in the
West of Shetlands acquired from DONG
Energy; INEOS FPS; INEOS Shale; and
INEOS Upstream Services.
In parallel with acquiring and
creating new businesses, INEOS Oil &
Gas has continued its exploration and
development activities. Tuft says the
company has drilled four new wells in the
Breagh gas field, which is located in the
southern part of the North Sea, growing
production there by more than 30%.
A large project is also underway to
reroute gas exports from the Clipper South
field in the North Sea into the Bacton
terminal for Shell. The new route is due
to go into operation by the end of 2018.
INEOS was forced to find a new export
route for the gas following ConocoPhillips’
decision to close the Theddlethorpe Gas
Terminal by the end of 2018.
INEOS Oil & Gas also did another
deal last year to farm into some acreage
INEOS has established itself as a leading player in the oil and gas sector
in the West of Shetlands with Siccar
Point Energy to tap into a prospect called
Lyon, which Tuft says has the potential
I
NEOS is making huge strides with As if the size of the acquired assets to unlock that entire area. INEOS has
its oil and gas business, which was was not enough to digest, the company positions in four fields that make up
boosted last year with two major had to deal with a crack in the FPS after the Lyon cluster: Lyon; Tobermory;
acquisitions, notably DONG Energy just a few weeks of ownership, which Bunnehaven; and Cragganmore. Initial
and the Forties Pipeline System (FPS). presented an unexpected challenge. Geir survey work indicates that the cluster
The DONG deal has turned INEOS Tuft, CEO of INEOS Oil & Gas, says that has extensive gas reserves of between
Oil & Gas into the biggest private with hindsight, it cemented the oil and 3-5tcf of gas. This, says Tuft, would match
enterprise operating in the North Sea gas world’s view of the company as a very major gas fields such as Elgin Franklin,
and taken the UK-headquartered group capable operator of very complicated “We have great Britannia and Laggan Tormore.
from a producer of 20,000 barrels of oil kit. “It was a challenging start but hopes for growth “We have great hopes for growth
equivalent per day (boepd) to 100,000 FPS got a lot of praise from regulators and long-term and long-term opportunities,” says Tuft.
boepd (2016). and customers on how it handled the “Further gas is very near to coming on
opportunities”
The number of fields has grown disruption and communicated with stream in the new Breagh wells and,
significantly, with around 570m boe of stakeholders,” he says. within a couple of months, in the Clipper
commercial and potential oil and gas Following the acquisitions, INEOS Oil South fields, which gives us more long-
reserves across the Danish, Norwegian & Gas designed and implemented a new Geir Tuft, term potential. Northwest Shetland could
and UK Continental Shelves that are ripe corporate structure, which split the group CEO, INEOS also prove to be a prolific gas area as well
for development. into six separate businesses, allowing Oil & Gas as other parts of the West Shetlands.”
8
The company is making progress in
Norway and Denmark. Having gained PLENTY MORE IN THE PIPELINE
licences in Norway in 2017, INEOS
Oil & Gas is now bidding on a handful The acquisition of the Forties Pipeline optimistic about the future for FPS. He
of new licences in the 2018 round. System (FPS) is a good illustration of says: “FPS is a really good business. We
“Norway is an interesting area for us what INEOS is all about – taking unloved want to reduce the rate of decline in the
and there are opportunities that we can assets and turning them into a bigger North Sea from about 10% to 3-4% and
progress in acreage and potential other and better business. put money back into FPS and revive the
acquisitions,” Tuft says. The move gives INEOS the last piece of assets. We have a very active commercial
He adds that the company has also the Grangemouth puzzle. Having bought team chasing every molecule of business
been looking at the opportunities offered the refinery and chemical plant from BP to 2040 and beyond.”
in Denmark by the former DONG assets. in 2005, the purchase of FPS reunites the Gardner adds that INEOS wants to make
The Siri field is coming to the end of its life Grangemouth assets. “We are putting the the UK oil and gas sector healthy again
and INEOS is considering options to see synergy at Grangemouth back together and use the time and positive cash flows
if it could get a few more years out of the again,” says Andrew Gardner, CEO of so that 10 years ahead, the company can
asset. Tuft says another five years would INEOS FPS. offer a “very attractive proposition” for
bring considerable value to both INEOS BP built the 235-mile pipeline system the remaining oil and gas based on low
and to Denmark, but the situation is as a means of transporting gas and transportation costs.
complicated by the fact that Siri is a chalk crude oil from the Forties oilfield, which The company is now starting
field, which means it is more difficult and began operating in 1975. The network detailed engineering studies to
expensive to extract the oil. However, Tuft runs from the Forties Charlie platform determine the best way forward for
says it is easier to take these opportunities through the Unity riser platform to investment. Gardner expects INEOS
now that oil prices have lifted to $70-75/ the terminal at Cruden Bay, and on to FPS will probably have to spend around
bbl, than when oil was at $40-45/bbl. The Kinneil, Grangemouth. Gardner says $300m-400m in plant and equipment
Brent crude oil price was hovering around there are currently some 85 different oil over the next three to four years.
$72/bbl in mid-August. rigs attached to FPS, which at its peak As well as putting money back into
INEOS Oil & Gas has also been processes 1.1m bbl/day. the main assets, Gardner says INEOS
working to take cost out of the Danish Having sold the is also working
operations and has reduced manning Forties field to with employees
to more appropriate levels with Apache in 2003, “We are putting the and contractors to
Denmark no longer being a corporate BP kept FPS until synergy at Grangemouth improve the overall
headquarters as well as an operating April 2017, when back together again” condition of the
unit. DONG had previously been the energy giant site. The company
operating a global business out of the agreed a sale is currently focused
Copenhagen headquarters. to INEOS. The Andrew Gardner, on a programme
Turning to the UK and shale, Tuft deal gave INEOS CEO, INEOS FPS that it calls asset
says the company concluded its biggest ownership and care, or Ascare: this
seismic survey ever in the country last operation of FPS, improves structural
year. The survey of more than 250km2 the Kinneil terminal and gas processing integrity; operational procedures; and
was conducted in the East Midlands area plant, the Dalmeny site and Hound housekeeping. In order to show the
to provide data on the underground rock Point terminal, sites at Aberdeen, the importance of Ascare, the company also
structure for future drilling. Forties Unity Platform and associated makes this a condition of the staff bonus
While noting that attitudes in the infrastructure, and made it responsible for scheme.
UK to shale and unconventional delivering almost 40% of the UK’s North Gardner says INEOS FPS is investing
gas are “complicated”, Tuft says that Sea oil and gas. About half of the gas in $5m this year to improve AsCare. The
operating in the local environment the FPS system is used as a feedstock in first phase of the programme is to
works reasonably well as long as you are the KG cracker at Grangemouth. improve housekeeping. “Our operations
respectful and have a sensible dialogue INEOS took over the business at the end teams have taken the initiative and are
with the community. He explains that, of October 2017. Gardner says the assets improving the site condition every day.
as yet, INEOS has not been fracking were in a mixed condition and some In addition, every Friday our office staff
but is trying to drill for core samples. areas require significant investment. He and our engineering contractor partners
“There is a fantastic opportunity in the explains that BP believed the assets would take part in housekeeping events to tidy
UK but until we have drilled a few wells, probably need to shut down in 2029-2030 up the site. We have removed about 100
it is difficult to see whether fracking is because of shrinking oil volumes from the skips of material and rubbish so far. We
economically feasible,” says Tuft, who North Sea. are putting pride in the site back in place,”
adds that the company is talking to local But, INEOS thinks otherwise. Gardner comments Gardner.
authorities to try and make the current says that FPS will remain open until at INEOS FPS is also growing the number of
lengthy planning process more efficient. least 2040. INEOS is actively sharing staff. Gardner notes that when INEOS took
Tuft is full of enthusiasm and this view with customers so that they control of FPS, it employed about 300 staff
optimism for the future - not surprising can continue to invest in their fields and but also relied on another 150 contractors
given that INEOS has grown into a choose FPS as their route to shore. or agency staff every day. The company is
substantial onshore and offshore oil and While it is true that the North Sea is bringing people into the business to reduce
gas business in little more than two years. on a declining curve, Gardner is very the dependence on outsourcing.
by Elaine Burridge
9
20TH ANNIVERSARY VENTURES
CHALLENGERS
FOR THE AMERICA’S CUP
Trying to win one of the world’s most competitive yacht races is a
little outside the usual remit of a leading chemical company – yet
INEOS is never one to shy away from a challenge
O
ver the next three years, the INEOS too. They have a great network
company has pledged £110m to of contacts, manufacturing and
support an attempt to win the mechanical engineering knowledge
America’s Cup, one of the few sports as well as high-tech materials. That
titles never to be held by a British team relationship has been great and is still
– particularly galling given Britain evolving.”
helped form the event 167 years ago. INEOS’s experience with Projekt
Dating back to 1851, it is one of the Grenadier, the development of a new
oldest continuous sporting events in uncompromising 4x4 off road vehicle,
the world – and certainly one of the has been a particular boon, adds Ainslie.
most hotly-contested. “In many ways, it relates quite
The newly-named INEOS TEAM heavily to the systems we’ll be using
© HarryKH/INEOS TEAM UK
UK, representing the Royal Yacht on the America’s Cup boat,” he says.
Squadron Racing, and skippered by the “With the efficiency savings required,
world’s most decorated Olympic sailor, advanced control systems, sensors and
Sir Ben Ainslie, will be challenging for valves, there are a lot of parallels with
the 36th America's Cup in 2021. They developing a new car.”
join two other teams vying for the A 28ft prototype has already been
right to face the current title holders, INEOS TEAM UK founder, Jim Ratcliffe (right) with built and despite still being very early in
Emirates Team New Zealand, and team principal and skipper, Sir Ben Ainslie the design process, and a fraction of the
win the coveted trophy, affectionately size of the final vessel, it is providing
known as the Auld Mug. some valuable insight and experience
Introduced by a mutual friend, unique vessel, forming a team of top designers and sailors, for the team.
INEOS chairman Jim Ratcliffe and and helping with the significant logistical costs in shipping INEOS TEAM UK currently has
Ainslie soon discovered their shared everything to New Zealand where the event will take place. 75 people working on the project and
passion for adventure and putting True to form, INEOS will again be breaking new ground the crew has already gained some race
Britain back on the map. in the competition as it requires an entirely new type of boat. experience by competing in regattas. In
“Jim and I started talking about the The AC75 Class is a monohull yacht fitted with foils – huge August they won the GC32 Racing Tour’s
challenges of the new boat, our strategy manoeuvrable legs not only offering stability at high speeds 37 Copa del Rey in Palma on the Spanish
and about creating a winning team - but helping counterbalance the boats to prevent capsizing. island of Mallorca, and are participating
and he very quickly said he’d like to “We’ve never seen a monohull this big that is able to foil – in another event in Sardinia as we go to
help. Thanks to Jim’s enthusiasm and it’s really pushing the limits,” points out Grant Simmer, INEOS press in September.
his desire to see Britain lift the Cup, TEAM UK’s CEO and four-time winner of the America’s Cup. “We’re now a second-generation
INEOS is now playing a major part,” “The competition is fairly similar to Formula 1 as it’s a sporting team and learned a huge amount
says Ainslie, INEOS TEAM UK’s team event that relies a lot on technology. The boat we’re competing in the last campaign,” says Ainslie.
principal and skipper – and member of in is a completely new concept so requires a lot of technical “We’ve finetuned the team and got the
the 2013 America’s Cup winning team. development and a great team behind it. We’re building backing of Jim and INEOS, so have the
“We really want to capitalise on all possibly one of the most high-tech vessels ever.” firepower. It’s now down to us to get the
that experience. You can learn a lot Work on the blueprints for the new boat started in March strategy right and if we can do that, we
from an organisation that has been and since INEOS has come onboard, the team has been have a fantastic opportunity. We really
as successful as INEOS. Sailing is all able to capitalise on a huge pool of skills and manufacturing want to do well for one another and
about efficiency, attention to detail, experience. The team are in constant contact with INEOS, desperately want it to be a success - for
determination and our focus as a team and regularly share updates on the progress of the project. the team, for INEOS and for Britain. I
– very similar principles to business.” “Clearly, we’re now being funded at a level where we think it would be a major moment in
The funding will primarily be spent can be most competitive but we’re also getting a lot of our sporting history.”
on the design and manufacture of this management advice, commitment and support from by Andy Brice
10Auto project
steps up a gear
Cruiser that the wartime Jeep inspired – vehicle’s credibility – and the success of
Projekt Grenadier has a distinct style and the project – depends on this versatility.
identity all of its own.” It will be a tool – that is also cool – with a
Underneath the skin, a test vehicle focus on function rather than frippery.”
– a chassis and suspension mule – has Tennant notes that the regulatory and
Full speed ahead for auto project
already been put through its paces in legislative environment is very different
on- and off-road conditions, and come to that into which earlier 4x4s were
through with flying colours. “With the born so every possible avenue regarding
W
ith INEOS’s new 4x4 off-road mule, we were able to experience the efficiency, fuel economy, light weighting
vehicle expected to roll off chassis and suspension set-up that we and safety is being explored.
the production line in late have developed for our vehicle. Let’s just There is still plenty of work to be done
2020, it is no surprise that the project say that after some robust testing, where – including agreeing on a name for the
has been accelerating at pace since its the mule was pitched against our main new vehicle. INEOS is inviting suggestions
announcement early last year. competitors in the market, there were through its website and has already accrued
“There are so many moving parts some broad smiles on the faces of the around 4,000 responses. For now, at least,
to this project,” says Mark Tennant, project team,” adds Tennant. it will continue to be known as Projekt
commercial director of INEOS “We’re not going INEOS has high hopes for its 4x4 and Grenadier – a nod to the Grenadier pub
Automotive, “but the INEOS ‘can do’ to be doing plans to produce around 25,000 vehicles just a stone’s throw from INEOS’s London
attitude is working really well – we’re things the each year, at a starting price in the region headquarters where the idea was born.
getting things done fast.” conventional, of £35,000. Diesel, petrol and possibly an The search also continues for a
MBtech, a former subsidiary of automotive way alternative fuel version are planned. Europe production facility and several suitable
Mercedes Benz, was appointed as and the US are important markets, but so sites have now been shortlisted, with a
– we want to
Projekt Grenadier’s engineering partner too are sub-Saharan Africa and Australia. decision expected later this year.
at the beginning of the year, bringing
be different” “Today, there are plenty of Where appropriate, the team intends
a 200-strong team and many years of homogenised SUVs but there’s very little to leverage technologies, expertise and
experience with leading automotive on the market that could be called a knowhow from elsewhere in the business
manufacturers. Early design concepts Mark Tennant,
genuine utility vehicle - and that’s where too, he adds. “INEOS is a very significant
have made the journey from the Commercial director, the opportunity lies,” says Tennant. supplier of commodities, components
computer screen, to 1/3 scale models, and INEOS Automotive “We want the Grenadier to be as and composites to the automotive
now to a full-size clay version. versatile – as usable – as possible,” he says. industry, so we’re looking to capitalise on
“As the design has become more “First and foremost, it is being designed our expertise in those areas.
refined, the character of the vehicle is to do a job of work. For the farmer “We like the fact that we’re coming
really coming through strongly,” says moving equipment, livestock or feed into the automotive industry completely
Tennant. “The devil really is in the detail around the farm; for the outdoor sports fresh but with a wealth of manufacturing
of the design process. While we have enthusiast, loading up the surfboards, and engineering experience. We’re not
consciously referenced the original 4x4 the skis or the climbing equipment; for going to be doing things the conventional,
pioneers – the first Willys Jeep, and towing the horsebox, or RIB; for the automotive way – we want to be different.”
the Series I Land Rover and early Land camping trip, or the school run. The by Andy Brice
FITNESS CAMPAIGNS ARE UP AND RUNNING
Childhood obesity remains one the Both aim to promote a healthy previous year.
biggest threats to the wellbeing of lifestyle to children and encourage The business has also sponsored The
young people – so much so that the regular exercise. INEOS chairman Daily Mile (www.thedailymile.co.uk)
World Health Organisation has called Jim Ratcliffe launched Go Run For - a programme that encourages primary
it one of the biggest public health Fun (www.gorunforfun.com) a few schools to get pupils active by taking
challenges of the 21st century. years ago and the events now take them for a 15-minute jog or run –
place worldwide, drawing more than making them fitter, healthier and more
In a bid to keep children active and 260,000 eager participants. The most able to concentrate in the classroom.
healthy, INEOS has given its backing to recent race in Italy this June had more With INEOS’s backing, founder Elaine
several fitness initiatives: Go Run For than 2,400 children aged 5-10 taking Wyllie is well on the way to getting every
Fun and The Daily Mile campaign. part – over three times the turnout the school involved.
11Founded in 1998, UK-headquartered INEOS has grown to
become one of the world’s largest chemical companies. It
comprises 34 businesses, employs 20,000 people globally
and achieved sales in excess of $60bn in 2017. The vertcally-
integrated chemicals producer has 171 manufacturing
sites in 24 countries, and boasts a diversified portolio
serving the petrochemicals and oil & gas markets.
INEOS Group Headquarters
38 Hans Crescent
Knightsbridge
London SW1X 0LZ
UK
www.ineos.com @INEOS
© 2018 Scribe Creative.
All rights reserved.
No reproduction without prior
permission from the publisher
Produced by
www.scribe-creative.com
Cover: © HarryKH/INEOS TEAM UKYou can also read
