Ineos is braving the energy crisis to secure €3.5 billion for a Petchem plant in Europe

Ineos has secured €3.5 billion in financing to help build a new energy-efficient petrochemical plant in Belgium, a vote of confidence in a European sector rocked by the energy crisis.

The company, run by Britain’s richest man Jim Ratcliffe, plans to develop its ‘Project ONE’ cracker in Antwerp – described by Ineos as the largest investment in European chemicals in a generation – although rivals such as Germany’s BASF have announced to be downsized “permanently” in Europe due to rising energy costs.

According to Ineos, the new plant, plans for which were first announced in 2019, will still be commercially viable as it will be one of the most energy efficient in the world and produce far fewer emissions than rivals.

The company said it was confident Europe’s petrochemical and manufacturing sectors could adjust to the energy crisis, sparked after Russia cut gas supplies following its invasion of Ukraine, despite warnings that capacity is increasingly being exported to Asia and the US be relocated to the United States.

“We believe in the future of Europe and the renewal of European industry,” said Jason Meers, the project’s chief financial officer.

“The reason securing funding is so important is to show that if you do the right things with the right projects, you can get support. The economics of the project are extremely solid.”

The €3.5 billion financing will come from 21 commercial banks and the export credit agencies of the UK, Spain and Italy, along with a loan guarantee of up to €500 million from Gigarant, part of the Flemish government.

The new cracker at Ineos’ existing plant in Antwerp will convert inexpensive ethane – a by-product of natural gas production – into ethylene, a key feedstock used in the manufacture of everything from food packaging to insulation.

Ineos has built up a fleet of 16 tankers dedicated to transporting ethane from the US to its plants in Europe over the past six years, benefiting from lower raw material costs brought about by the US shale boom.

“We take the US energy industry and import it to Europe,” Meers said. “That makes it extremely competitive.”

While European gas prices have come off their peaks last summer when they reached ten times their historical average, they remain high compared to pre-crisis levels.

According to Ineos, the plant could be running on low-carbon hydrogen within 10 years, provided the fuel is set to take a larger share of Europe’s energy mix.