INTERNATIONAL BUSINESS
BP Chemicals Is Aiming To Become A Leading Polyethylene Supplier London-based firm targets polyethylene as one of three product lines for focusing its strengths in raw materials, marketing, and technology Dermot A. O'Sullivan, C&EN London
BP Chemicals International is edging toward becoming one of Western Europe's leading polyethylene suppliers. Current plans, if they materialize, will raise the company's combined output capability for making high-density, linear lowdensity, and conventional lowdensity polyethylenes to nearly 1.94 billion lb annually, about on a par with Italy's EniChem, the present leader in Western Europe. The development is the more remarkable considering that it was only within the past eight years that the company became a major factor in polyethylene production, mainly through acquisitions. Until then, BP Chemicals was limited to HDPE made at Grangemouth, Scotland, and part ownership of an LDPE operation in West Germany. "Polyethylene has become one of our three major families of products that we are going to drive for strategically in the future," notes Ray Knowland, managing director of London-based BP Chemicals. The other two are specialties, and acetic acid and its derivatives. BP Chemicals' newest plant is in Lavera, France, near Marseilles. It is a dual-purpose HDPE/LLDPE 220 million lb-a-year unit based on gasphase technology pioneered at BP Chimie, the French subsidiary. An 88 million lb-per-year plant, the first to use the process, continues in operation at the site.
Polymerization takes place in a vertical, cylindrical reactor enlarged at the top in the shape of a bulb. Ethylene, together with a unique Ziegler catalyst system, enters the lower end. An ethylene and hydrogen mixture is fed into the base; the mixed gas stream keeps the polymer particles that are formed in a fluidized-bed state. The hydrogen serves to control the molecular weight of the product. When LLDPE is being made, a second monomer— butène, for example, or 4-methyl-lpentene, preferred for making tough film-grade material—is added with the gas stream. Polyethylene leaving the reactor as a fine powder is degassed, pelleted, and bagged. Unreacted ethylene and hydrogen go to a heat exchanger and are recycled. The catalyst, which was developed by company chemists and is produced at Lavera, plays a key role in the success of BP's continuous polymerization process. Its physical
characteristics meet the optimum requirements of the fluidized bed and lead to a high degree of reaction efficiency. No less important, the catalyst allows for good control of the reactor temperature, all but eliminating the risk of hot spots, which, in turn, avoids formation of lumps and consequent fouling of the reactor walls, or blockages. Advantages cited for the gas-phase process include relatively low investment and operating costs, low energy consumption, high output efficiency, and consistent product quality. BP managers now are mulling the possibility of installing a similar unit at Grangemouth. It would replace an existing 176 million lb-per-year conventional LDPE plant there, resulting in a net annual capacity increase of 44 million lb. That is in line with the company's current policy, Knowland points out. "Whenever we've made an investment we've done so on the basis of scrap and build. Of course, sooner or later we shall run out of old plants to shut down, but we are not at that stage yet." The scrap-and-build policy also is being applied to polypropylene. An existing 176 million lb-per-year plant at Lavera will be phased out when a new one capable of making 330 million lb a year is completed in 1988. That operation will become part of a venture owned 49% by BP Chemicals and 51% by Atochem of France that pools the polypropylene interests of the two. With Atochem's annual capacity soon to be raised to 220 million lb, the new, as-yet-unnamed, company will rank fifth in Western European polypropylene production. Knowland is "optimistic that the polyethylenes market is going to be such that we will be able to jusJune23, 1986 C&EN
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International Business
Acquisitions boosted BP's polyethylene expansion BP Chemicals' purchase of Union Carbide's European ethylene derivatives business in mid-1978 was the springboard that launched it into polyethylene in a big way. For $400 million or so, the British company acquired at a single stroke an LDPE plant in Antwerp, Belgium, and one at Grangemouth, Scotland, a major BP Chemicals petrochemicals site (C&EN, July 3, 1978, page 11). Also included were ethylene oxide, glycol, and derivatives businesses based in Belgium, polyethylene processing operations in the U.K., and research labs in Geneva, Switzerland. The next significant event occurred
tify further investment, possibly before the end of the year." He doesn't rule out the idea of putting in an LLDPE unit in West Germany, perhaps with a 275 million lb-per-year capacity. "In a marketplace like West Germany it would be very surprising if we were not looking at how we might exploit it better. We are examining the options open to us." Meanwhile, there's a good chance that BP Chemicals will take over the marketing of conventional LDPE made at Dormagen, West Germany, by Erdôl Chemie. Bayer, the joint partner in Erdôl Chemie, now sells the polymer made in a 660 million lb-a-year plant near Cologne. Ethylene comes from Erdôl Chemie's cracker on the site. Because Bayer is interested primarily in the cracker's C3 and C4 olefins, together with the benzene and toluene (for its range of synthetic rubbers and fibers), bowing out of polyethylene would make sense. "Negotiations now in progress with Bayer could lead in the near future to an agreement covering [our] marketing of all the polyethylene produced at Dormagen," remarks Robert Malpas, BP Chemicals' chairman. To wring additional earnings from its gas-phase fluid-bed ethylene polymerization process, BP Chemicals is making it available for licensing. Chevron Chemical and USI signed up last year, and Indian Petrochemical Corp. will use the pro20
June 23, 1986 C&EN
in 1982. That entailed what amounted to a portfolio swap between BP Chemicals and Imperial Chemical Industries. BP shifted its vinyl chloride and polyvinyl chloride operations to ICI. In return, it acquired ICI's U.K. polyethylene facilities and considerable technical expertise. Before those moves, BP Chemicals was a small factor in the overall business with a unit in Scotland, and joint ownership, with Bayer, of one in West Germany. The decision to move so vigorously into the market took some courage, at a time when the commodity polymers were in the doldrums and growth prospects looked bleak.
cess in its plant going up at Nagothane in Maharashtra state. Other agreements are being discussed. "Our policy on licensing is absolutely clear," Knowland says. "We will license selectively outside Europe. But the whole of Europe, from Finland in the north to the toe of Italy in the south, is our home market. And we intend to grow and become stronger in that home market." He notes that the company is "very attractively placed" in terms of proximity to the marketplace with its plants in Belgium, Scotland, and the south of France. A supply source in West Germany would give BP Chemicals additional competitive clout. "BP Chemicals," Malpas observes, "runs like a backbone through Europe, and is highly competitive at every stage of the route." Nor, as Knowland points out, is there any shortage of feedstock to make the ethylene that's required. "In Scotland we have access to North Sea gas. In Lavera, where we have a flexible and highly efficient cracker, we have access to feedstock passing through the Mediterranean. In West Germany, we have a 50% share in the large cracking complex at Dormagen based on naphtha." By his estimate, BP Chemicals' share of the West European polyethylenes market is 8 to 11%. "One appalling thing about the marketplace has been severe overcapacity, although it has been progressively coming down. The other is the num-
ber of producers, 15 or so, with importers besides. I look forward to the situation where the number falls below 10, preferably to six. However, I am quite sure that when we do get below 10, BP Chemicals will be one of the survivors." He acknowledges that this "may appear as a very arrogant statement," but he bases it on the result of a detailed evaluation undertaken some years ago on the full range of the company's products, the likelihood of their success or failure, and BP Chemicals' particular strengths. Set against such criteria as raw material supply, marketing position, and the degree of technical expertise, polyethylene, acetic acid, and the specialties emerged as products "strategically important to us, and where we will channel all the money that we can persuade our shareholder [British Petroleum] to give us," Knowland recalls. The many other chemicals in the company's stable of products— ethylene oxide and glycols, polystyrene, synthetic industrial ethanol, and the like—Knowland classifies as support products. "We are the largest producer of synthetic ethanol in Europe. It is a very important product. But it's not, by our definition, strategic," he explains. The firm's worldwide investment program runs at about $150 million annually. The bulk of the spending is in Western Europe, which ac-
Malpas: backbone through Europe
counts for some 90% of sales. "But we have important ambitions outside Europe/' Knowland is quick to point out. "We can't be strategic and ignore the rest of the world." Last year, for instance, it took a position in the U.S. wire and cable coatings market through the acquisition of Reichhold's polyolefin and vinyl materials division. Since renamed BP Performance Polymers Inc., the p u r c h a s e p r o v i d e s BP Chemicals with production facilities in California, Massachusetts, and New Jersey.
Wire and cable coatings constitute a high-added-value business in which BP Chemicals already has considerable technical expertise. No less important, the acquisition gives the company a U.S. platform for other developments in the specialties area. Knowland also has his eye on what he loosely describes as the Pacific rim. He notes that BP "has considerable oil and mineral exploration interests there. We see that as a marketplace we cannot ignore," he says. D
Bhopal affects India's chemical industry New legislation and modifications in operating practice have been the major impacts on the Indian chemical industry in the year and a half since the tragedy of Bhopal. K. R. V. Subrahmanian, managing director of dye company Colour-Chem, and president of the Indian Chemical Manufacturers Association, outlined some of the changes for chemical journalists in London recently. Newest action has been the passing, by both houses of the Indian Parliament, of a kind of "cradle-tograve" legislation, requiring chemical companies to be responsible for their materials from production to eventual disposal. The government must now establish the enforcement date. However, safety consciousness has not suddenly emerged from now h e r e , S u b r a h m a n i a n contends. "We had been doing the safety work all along, but we hadn't made this apparent," he says. "Now, we know we must make it demonstrably clear that we are working for environmental safety—visibly holding fire drills, and evacuation and emergency drills, for example; putting paragraphs on what we are doing in annual reports, and so on." Water and air pollution standards already had been high, because the Indian government had used stateof-the-art criteria when it first set standards. Since the Bhopal accident, however, enforcement of standards has been more stringent and visible. Even small companies, which historically have received exemptions on a variety of fronts, such as
value-added taxes, are now being expected to adhere to environmental standards, Subrahmanian says. Safety audits are also helping companies tighten their procedures, he suggests. For example, companies are seeking ways to minimize the hazards of shipping chemicals. To decrease the risks involved with shipping phosgene, some customers who use the compound as a building block for intermediates are licensing phosgene producers to make the intermediates. The Indian chemical industry evidently suffers from the same image problems that affect the industry in the West. Subrahmanian argues: "We are more than purveyors of poison. The positive contribution is far more—but that does not mean we have a license to destroy the environment. "The chemical press must desensationalize Bhopal, I think. The important thing is, if there is any human compassion left, to get quick relief and early rehabilitation of the people involved. My sole concern about Bhopal is the expeditious disbursement of relief to the affected parties. It is easy to damn the courts and the companies, but that's not practical. Legislators can fill your jails with executives of companies, but they can't guarantee public safety." More valuable, he believes, has been that Bhopal has opened the eyes of the entire international chemical industry to the need for tightening safety standards—a positive spinoff from the tragedy of
Bhopal. "The entire world has an obligation to establish positive lessons from this episode. Otherwise, the lessons will be lost." One of the lessons has been that environmental safety is the responsibility of the government as well as industry. The tragedy "led to a sea change in the Indian government's thinking about industrial problems," Subrahmanian says. For example, the g o v e r n m e n t has r e c o g n i z e d that controlling the environs around industrial sites is also its problem if people live very close to a plant. The government is also addressing the basic problem of infrastructure. "Safety requires infrastructure— what happens if the electricity fails for 15 minutes?" he asks. Electricity is a state-owned industry in India. To some extent, that topic is being addressed by the latest five-year plan. Early plans concentrated on cutting imports by encouraging local production no matter what the cost, and installing basic heavy industry, such as steel and aluminum. The previous five-year plan emphasized infrastructure needs such as power, roads, and communications. Now in the seventh five-year plan, the Indian government is moving from political to economic decisions, such as gradually removing import protection. According to Subrahmanian, the Indian government is becoming more pragmatic about industry. For example, it is prepared to talk about negotiating lower prices. And it is encouraging capacity expansions, even for production of chemicals that historically had been allocated to small chemical companies. The removal of import protection and the subsequent tide of imports are lowering profits in some industries. In others, business has been seriously affected—leather chemicals, for example, have been "completely debilitated." On the whole, though, he says the new pragmatism has been "a very fresh breeze of thinking for us." "We are tightrope walking for a while, yet," says Subrahmanian. "But the Indian industry must become more competitive. It will become so over the next three to five years." Patricia Layman, London June 23, 1986 C&EN
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