50 YEARS
PETROCHEMICALS & EPCA A PASSIONATE JOURNEY THE STORY OF AN INDUSTRY THAT SHAPED OUR PAST, IMPROVES OUR PRESENT AND BUILDS OUR FUTURE PUBLISHED ON THE OCCASION OF THE 50TH ANNIVERSARY ANNUAL MEETING OF THE EUROPEAN PETROCHEMICAL ASSOCIATION Foreword FOREWORD
Dear reader, Moreover our industry is here to stay This year marks EPCA’s 50th anniversary. because the global challenges we are “The global In order to celebrate this milestone in facing to maintain life on our planet – our history, we have chosen “50 Years conquering climate change, providing challenges can of Global Chemical Industry Evolution: health care, and ensuring energy and What’s Next?” as the theme of the water supply – can only be resolved only be resolved EPCA Anniversary Annual Meeting. with innovative chemical solutions Implied in this theme is the assumption and efficient (as well as effective and that the future builds on the foundation innovative) supply chains. All over the with innovative of the past. world, EPCA member companies and There are many quotes from people their visionary leaders and ingenious chemical solutions of all walks of life that underline this researchers are working to make correlation. Eric Micha’el Leventhal, a our future a bright one. and efficient supply literary consultant and holistic educator EPCA – with its more than 700 member on the island of Maui, Hawai’i, put it companies – has been actively supporting chains.” this way: “You invoke a new future these efforts by stimulating collaboration when you envision your past in the and knowledge transfer to enable progress light of your present.” This also holds and by advocating framework conditions true for our industry. to facilitate trade and business. And EPCA In order to reflect our past, EPCA has is committed to helping the industry be published this History Book that you are a responsible corporate citizen, good holding in your hands. On the following workplace, and enabler of sustainable pages you will read about milestones solutions in the future. reached by the chemical industry over the past 50 years aligned with the history of Enjoy reading, EPCA. It is a story of achievements and Tom Crotty, President, EPCA challenges, of progress and setbacks, and of inventors, leaders and visionaries. The History Book looks back on the beginnings of the petrochemical industry and its evolution during the past 50 years. But it also takes an opportunity to look ahead and outline our way into the future. The petrochemical industry has come a long way, it has navigated stormy waters and fought its battles, but at the same time it has created ground-breaking materials and enabled sustainable solutions for mankind.
3 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY TABLE OF CONTENTS INTRODUCTION CHAPTER 3 CHAPTER 5
AN INDUSTRY DESTINED OIL PRICE SHOCKS, RECOVERY FROM TO BECOME A GLOBAL EMERGING ECONOMIES RECESSION AND SECTOR AND ENVIRONMENTAL CONTINUED GLOBAL REGULATIONS EXPANSION 5 21 1970 to 1989 40 2009 to Present CHEMICAL INDUSTRY HISTORY CHEMICAL INDUSTRY HISTORY Market Turbulences and Industry Market Shake-ups and a Changing Reorganisation CHAPTER 1 Industry Landscape LOGISTICS & SUPPLY CHAIN HISTORY LOGISTICS & SUPPLY CHAIN HISTORY Logistics becomes more Specialised Logistics Reshaped to Serve New Trading THE START OF THE EPCA HISTORY Networks PETROCHEMICALS The State of the Industry EPCA HISTORY REVOLUTION The Financial Crisis and its Aftermath The Early Days up to World 7 War II CHEMICAL INDUSTRY HISTORY Early Technologies and Products CHAPTER 4 OUTLOOK LOGISTICS & SUPPLY CHAIN HISTORY The Foundations of Petrochemicals Logistics GLOBALISATION OPENING NEW TRANSFORMS THE HORIZONS CHEMICAL INDUSTRY CHAPTER 2 32 1990 to 2008 60 CHEMICAL INDUSTRY HISTORY CHEMICAL INDUSTRY & LOGISTICS & Petrochemicals Growth is being Sparked SUPPLY CHAIN HISTORY The Future of the Petrochemical Industry ECONOMIC RECOVERY LOGISTICS & SUPPLY CHAIN HISTORY DRIVES CHEMICALS Supply Chains are being Globalised EPCA HISTORY DEMAND EPCA and the Future EPCA HISTORY World War II to 1969 11 The Turn of the Century CHEMICAL INDUSTRY HISTORY The Impact of World War II LOGISTICS & SUPPLY CHAIN HISTORY Advances in Logistics GLOSSARY 66 PHOTO CREDITS 68 EPCA HISTORY The Beginning of EPCA REFERENCES 67 ACKNOWLEDGEMENTS 69
4 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Introduction INTRODUCTION AN INDUSTRY DESTINED TO BECOME A GLOBAL SECTOR
Petrochemicals are currently the biggest • Science & Technology — Combined of the industrial chemicals sectors, with economic factors, technology, “Petrochemicals accounting in 2016 for 40 percent of particularly production processes, the global chemicals market of around was the major driving force behind have made a massive €2.65 trillion. Petrochemicals represent the expansion of the petrochemical the majority of all chemicals shipped sector. between the continents of the world. • Industrial Trends — Oil prices and contribution They are organic chemicals derived from raw material (feedstock) costs, petroleum but can also be defined as feedstock availability, demand for to raising the chemicals produced, usually in bulk, from petrochemicals as raw materials, sales carbon and hydrocarbon raw materials, prices, investment levels, capacity standard of living including coal, natural gas and renewable utilisation in petrochemical plants. alcohols. They have a history — stretching • Production Structures — Many of the world’s back in parts to the 19th century — that production locations were dictated by has been beset by many economic, the need for integration of petrochemical commercial, technological and logistical and refinery production. Others were population.” changes, which the industry has shown stand-alone petrochemical sites. extraordinary resilience in adapting to. Gradually, petrochemical complexes However, from the beginning there have and clusters emerged, leading to also been underlying trends which have geographical agglomeration with inter- remained constant and still shape the regional and international production and industry today. supply-chain links between feedstocks, Almost from the start it was an industry intermediates and raw materials for destined to become a global sector downstream converters. because of the contribution it makes • Corporate Structures — The big oil to raising the standards of living of companies pushed petrochemical much of the world’s population. businesses, because of the added • Health, Safety and Environment — Since the early days, the same influences value of integration with refineries. HSE focus topics were prevalent from have been at work and would shape Nonetheless there were variations the beginning of the industry with the rate and nature of its expansion, its in sizes of business units, different health and safety matters looming large structure and organisation of production, managerial systems and a persistent initially. But environmental questions management systems, types of tendency towards concentration through gradually became predominant with, in technologies, production locations mergers and acquisitions (M&A). recent years, CO2 and greenhouse gas and logistics, up to today. • Supply Chain and Logistics — From emissions becoming the leading issue These influences are: the earliest days of petrochemicals in the fight against climate change. • Economic and Social Factors — production, the sector has been subject In all of these seven areas, there have Economic growth rates, consumer to repeated initiatives to streamline and been continuous challenges. The history of demand, life style changes, and the optimise logistics. There was a constant petrochemicals has been meeting those spread of the middle classes that struggle to eliminate fragmentation and challenges and successfully overcoming aspire to a better life with financial a need for greater integration of road, them. It is a story of achievement, affluence. rail, waterways and marine shipping. and the future will be the same.
5 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Introduction
The overall result of this tale of EPCA has strived over the decades achievement has been a massive to adapt to the changing needs of the “Petrochemicals contribution to raising the standard petrochemical business community and of living of the world’s population. their stakeholders — i.e. people such Petrochemicals, particularly synthetic as investors, employees, customers, represent the majority polymers, have been providing the means suppliers and authorities that have an for making materials and equipment interest in the industry — and challenge of all chemicals shipped which have substantially improved “business as usual” approaches for the levels of nutrition, access to drinkable long term sustainability of the industry. between the continents water, quality of clothing, buildings and This book provides a first-hand insight transportation, whilst also contributing into the evolution of the petrochemical of the world.” to the reduction of energy use and industry during the last 50 years and emissions. EPCA’s alignment with business and Founded in 1967, the European stakeholders’ requirements. Petrochemical Association (EPCA) has been actively accompanying the remarkable journey of achievements — and challenges — of the petrochemical industry for the past 50 years. Looking back over the decades, the vision of the EPCA founders who drafted the initial Articles of Association can only be applauded, in that they set objectives which remain as valuable today as in 1969.
6 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY CHAPTER 1 THE START OF THE PETROCHEMICALS REVOLUTION THE EARLY DAYS UP TO WORLD WAR II
7 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 1 — The Start of the Petrochemicals Revolution - The Early Days up to World War II
CHEMICAL INDUSTRY HISTORY
CARL BOSCH EARLY combination of catalysis and engineering (1874-1940) was to become the basis of a series TECHNOLOGIES German chemist- of innovations during the history of AND PRODUCTS engineer. Nobel Prize the sector. Ammonia tended to be for Chemistry in 1931. Developer of The boom years for petrochemicals in produced on refinery/petrochemical Fritz Haber’s ammonia synthesis into the developed world of the 20th century sites because of the need for hydrogen a large-scale industrial process for — North America, Europe and Japan while it was also an intermediate for commercial fertilisers which would — were in the 1950s and 1960s. In petrochemical products. transform modern agriculture. fact, in the US the golden age of This however posed one of the first petrochemicals started immediately major health and safety challenges after the end of World War II in the because of the potential danger of major WALLACE CAROTHERS second half of the 1940s. This was due accidents due to the high temperatures (1896-1937) to the innovations made in the 1920s and pressures within its reactors. US chemist, who led and the 1930s and during the war as a DuPont team, which well as to the rapid reconstruction of POLYMERS REVOLUTIONISE discovered in the 1930s the synthetic Europe and the economic recovery THE MATERIALS WORLD rubber Neoprene and a polyamide after World War II. Meanwhile the foundations of polymer fibre, later to be called Nylon as an Initially the petrochemical industry was chemistry, a vital source for the alternative to silk stockings. able to rely on product and process development of petrochemicals, many technologies based on the conversion of which are plastics, were being laid in FRITZ HABER of coal, natural gas and alcohols into the 1920s by Swedish scientist Theodor (1868-1934) chemicals. Some of the discoveries of Svedberg and German chemist Hermann German chemist. the science behind the technologies were Staudinger. Earlier, Belgian chemist Nobel Prize for mainly made in academia, particularly Leo Baekeland reacted phenol with Chemistry in 1918. Inventor at in Europe, in cooperation with visionary formaldehyde to make the thermoset laboratory scale of the catalytic industrialists. polymer Bakelite, which retained synthesis of ammonia from hydrogen In Germany, before World War I, chemist its shape after being heated. This is and atmospheric nitrogen at high Fritz Haber discovered the catalytic considered to mark the beginning of temperatures and pressures. process for synthesising ammonia from the age of plastics. In the 1920s, it hydrogen and atmospheric nitrogen was commercialised for the manufacture LEO BAEKELAND under conditions of high temperature of radio and telephone housings and (1863-1944) and pressure. To develop the process for electric insulators. Belgian-American large-scale production, Haber teamed up The world’s first commercial-scale ethylene chemist. Inventor of with Carl Bosch, a chemist and engineer cracker was built by Union Carbide in West Bakelite, a thermosetting resin made at BASF. Both scientists received Nobel Virginia in the early 1920s. At DuPont, by reacting phenol and formaldehyde Prizes for the achievement. in the late 1920s Wallace Carothers under high pressure. Dubbed the The breakthrough was highly significant invented neoprene, a synthetic rubber Father of Plastics due to Bakelite’s because it enabled abundant quantities of with a similar chemistry to isoprene processability. nitrogen-based fertilisers to be provided at the core of natural rubber. Then he to grow the crops needed to feed the discovered nylon, although a chemist at world’s increasing population. the German combine I.G. Farben soon It was also important to the future afterwards developed a more efficient petrochemical industry because its process for making the polyamide.
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CHEMICAL INDUSTRY HISTORY
By the late 1930s most of the major CORPORATE LEADERS ESTABLISH polymers of the petrochemical revolution THEMSELVES “the foundations of the second half of the 20th century The major companies behind the discovery had been discovered. In addition to and development of the carbon-based of polymer nylon and thermosets these included organic chemicals were destined to the leading thermoplastic polymers, become the technological and market chemistry were being which change their shape when heated leaders in petrochemicals. For many — like polyethylene (PE), polypropylene it was a position they were to retain s (PP), polyesters, polystyrene (PS), or until the 1990s and 2000s and for a laid in the 1920 .” polyvinylchloride, commonly known few until today. as PVC. Many of these started to be In the US these pioneers included made in commercial quantities from DuPont, The Dow Chemical Company feedstocks from petroleum production (Dow), Union Carbide and 103 of New in the US in the 1930s and then in much Jersey. In Europe they were led by larger quantities during the war. BASF, Bayer and Hoechst, which were merged temporarily into I.G. Farben, ICI and BP of the UK, and the Anglo- Dutch Shell.
9 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 1 — The Start of the Petrochemicals Revolution - The Early Days up to World War II
LOGISTICS & SUPPLY CHAIN HISTORY
THE FOUNDATIONS introduced as the basis for a design which OF PETROCHEMICALS is still being used to transport refined “The Motorised tank LOGISTICS products and other bulk liquids today. Pipelines, initially made of wood and then truck was one of the most With respect to logistics, the laying wrought iron, provided a cheaper means of the groundwork for what was to of conveying oil from the Pennsylvanian important innovations of become the petrochemical era began fields to railroads. In 1879 the first long- even earlier than that for the chemical distance pipeline was opened to deliver industry. oil with the aid of pumps over 100 miles that time.” The basic concepts in transportation through mountainous countryside. Soon and communications which were to pipelines were to become the main make up the core of petrochemicals means of transporting oil across land. During World War I, the capacity of distribution — rendering mass production As the networks of pipelines and rail the global tanker fleet was more than of petrochemicals economically feasible tank cars expanded, local hubs for the doubled. The additional ships were — emerged first in the oil and petroleum distribution of refined products by horse- needed to meet a big increase in sector in the mid-to-late 19th century. drawn wagons were set up in the US demand for fuels but also to replace Soon after commercial quantities of oil with storage tanks with capacities from tankers being sunk by submarine. But were first produced in Pennsylvania in a few hundred to tens of thousands it meant that after WWI there were the US in the 1860s and then refined of barrels. many surplus tankers which were sold mainly into kerosene for lighting, and By the last decades of the 19th cheaply on the open market. This led to into health care products for instance for century the oil companies and traders the rise of independent tanker owners disinfection or skin care, supply chains had developed fuel tankers to serve serving a fast expanding market for were being created from the oil well to international networks of storage depots chartered vessels. the retail outlets for lamp fuel. Similar and terminals for the distribution of Throughout much of the first half of chains were being formed in eastern kerosene in tin cases to inland retail the 20th century the logistics of first and central Europe where kerosene was outlets. These distribution systems kerosene and then gasoline distribution, becoming a thriving business because extending across the Atlantic from the for which the demand was much greater of the local availability of oil and refining US to Western Europe and from Russia because of rapidly increasing sales of units. to the Far East caused a big increase in automobiles, were considerably improved The key transportation and logistical refining capacity, because of the size of by technological and organisational components of these chains were the market which their products were innovations. barrels, tin cases, tanks, railway tank able to supply. One of the most important of these cars and pipelines for carrying the oil These ocean-going tankers posed big innovations was the motorised tank and kerosene from one distribution challenges for ship designers. Cargoes truck. They were first introduced in the point to another. A variety of containers had to be well separated from engine 1900s in the UK and soon afterwards were used to transport the oil and fuel rooms because of the danger of fires, in the US where their numbers grew by road, rail, inland waterways and while they had to have room to expand rapidly. In the 1910s there were over marine shipping. and contract, to be adequately ventilated 20 vehicle manufacturers making tank Railways transported oil and fuels at and to be relatively stable so that liquids trucks initially with solid rubber tires and first in vertical tanks on flat rail cars. By did not slosh from side to side. By the wooden wheel spokes. In the 1920s the late 1860s more efficient and safe late 19th century tankers were being when the US tank truck fleet reached boiler-type tank cars, with the tanks made with several compartments which over 100,000 these were replaced by integrated with the wheel chassis, were could be filled directly by pumps. pneumatic tires and steel spokes.
10 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY CHAPTER 2 ECONOMIC RECOVERY DRIVES CHEMICALS DEMAND FROM WORLD WAR II TO THE 1960s
11 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
CHEMICAL INDUSTRY HISTORY
THE IMPACT fast that it was soon one of the biggest to components for automobiles and OF WORLD WAR II contributors to the US gross domestic electrical household appliances. Also it product. could supply man-made fibres to satisfy Two major forces — World War II and In much of the rest of the developed a fast growing demand for clothes and the post-war economic recovery — world demand took several years longer textiles. pulled the petrochemical sector into to bounce up to the levels of that in the In the US, consumption of synthetic an era of large-scale technology-driven US. Then, even when it began to increase fibres — polyester, polyamide, acrylics production and commercialisation, strongly, there was for a while a lack of and polyolefins — rose from zero in the starting in the US and soon afterwards know-how and financial resources to late 1940s to account for almost one third Western Europe. repair chemical plants damaged during the of the total domestic market for fibres WWII provided the government funds war and build state-of-the-art new ones. in 1969. By the mid-1950s synthetics — and the urgency needed for the Money was a major difficulty in Western had close to a one-third share of the large-scale realisation of technologies Europe. First the region went through women’s and children’s wear market discovered and developed in the 1920s a period of austerity to rebuild basic and over a third of textiles for industrial and 1930s and in some cases even infrastructure. But once that was use. By the late 1960s close to a third earlier. over the banks were not geared up to of home furnishing fibres came from Then, 2-3 decades after World War II, fast channel funds into chemicals and other synthetics. economic growth in the developed manufacturing capacity. world was to provide the next impetus Much of the funds and engineering THE DIFFICULT TASK OF behind the petrochemical revolution. know-how had to come initially from BUILDING PRODUCTION The countries which were leaders in US companies, especially oil producers CAPACITY petrochemicals production tended to be with expertise in refinery processes. The US was able to take advantage of the countries with the highest levels of the production and logistics infrastructure GDP per capita — with the US being by ELIMINATING THE GAP BETWEEN built in the country in the 1930s and far the world’s richest country, followed SUPPLY AND DEMAND 1940s to establish a petrochemical sector by Japan, Germany, France and the The rapid rise in demand for chemicals before other industrialised nations. The UK. Populations with high disposable stemmed from the rising incomes Europeans were slow off the mark in income had the money to spend on of consumers and from industries upgrading and constructing plants partly consumer and other products with responding to their needs. because of a lack of finance and a lack of high petrochemicals content. Economic planners in the 1940s in a clear strategy for how to handle what At the same time the technology was, North America and Western Europe were for most companies entirely new on the whole, able to keep pace with expected soaring demand for consumer markets in plastics and man-made fibres. rapidly increasing demand, in particular products, automobiles, electrical Nonetheless the production capacity through the development of processes appliances and clothes. But it turned gap was gradually closed. The divide able to achieve the economies of scale out to be even higher than forecast. narrowed considerably in the 1960s necessary for ensuring petrochemicals Manufacturers struggled to keep up. with Western Europe having 6.3 million were able to meet the needs of rising Because of its potential for large-scale tonnes of ethylene capacity — almost living standards at low cost. output and low cost products the an eightfold rise in ten years — while However, initially only the US was able petrochemical industry could provide the US capacity rose threefold to 9.3 million to scale up the processes for making means for eliminating the gap between tonnes. petrochemicals in sufficient quantities supply and demand. to meet demand. The petrochemical In particular it could provide plastics for a industry in the country was growing so wide range of materials from packaging
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CHEMICAL INDUSTRY HISTORY
A platform for the expansion of period were located adjacent or close to KARL ZIEGLER petrochemicals in Western Europe expanded or newly constructed refineries. (1898-1973) came from the international oil companies, It was not only the convenience of German chemist. such as ExxonMobil (with its Esso brand feedstocks being available close by. The Nobel Prize for in Europe), Shell and BP. ExxonMobil proximity helped speed up the building Chemistry in 1963 (with Giulio established a petrochemicals complex of petrochemical units. Engineering Natta). Discoverer of catalysts adjacent to its Esso refinery in Fawley, contractors — most of them from the in the 1950s for the large-scale southern England, which was one of US — could transfer their expertise in production of polyethylene opening Europe’s first petrochemical facilities. the design and construction of refineries the way to a mass thermoplastics Bayer, which with BASF and Hoechst to doing the same with petrochemical market. was the main component of the former facilities. I.G. Farben, established a partnership Eastern Europe took even longer to adjust with BP to set up a joint venture named to the new petrochemical technologies GIULIO NATTA Erdolchemie for the purpose initially amidst the problems of centrally planned (1903-1979) of providing acrylonitrile for synthetic command economies and an intra-trade Italian chemist. fibres production. system run by COMECON. Nobel Prize ExxonMobil built petrochemical facilities The Japanese petrochemical industry for Chemistry in 1963 (with elsewhere in Germany, while in France it also took a different direction from its Karl Ziegler). Using Ziegler’s constructed the country’s first ethylene Western counterparts mainly because catalysis work, Natta developed cracker, a 30,000 ton-a-year unit on the of its system of dividing industry into stereoregular polypropylene in Normandy coast. conglomerate organisations of Keiretsu 1954 and other catalyst systems for BP created another partnership on (a set of companies with interlocking a range of polymers. mainland Europe with Kuhlman and business relationships and shareholdings) Pechiney of France for the establishment through cross-share holdings. Most of the of a petrochemicals complex called country’s main petrochemical operators Naphtachimie in the south of the country. — Mitsui, Mitsubishi, Sumitomo, Asahi, Shell formed a joint venture with BASF Showa Denko — were members of in Germany — Rheinische Olefinwerke Keiretsu. (ROW) — to produce polyethylene, which started operating in 1955. In fact THE EMANCIPATION demand for its output was so strong OF PETROCHEMICALS it soon boosted its annual capacity to MANUFACTURERS 125,000 tonnes, making it at the time Much of the new petrochemicals capacity one of the world’s largest polyethylene across the world was based on crude plants. oil-derived feedstocks, because of Hoechst decided to go it alone, building their abundance, relatively low cost two crackers in the 1950s near the city and ability to serve large-scale plants. of Frankfurt. Caltex of the US soon A high proportion of petrochemicals afterwards built a nearby refinery which production was closely linked supplied feedstocks and ethylene to to feedstocks from refineries so Hoechst. petrochemical plants would tend to be Throughout most of Western Europe located adjacent to refineries or within most petrochemicals in the post-war refinery complexes.
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CHEMICAL INDUSTRY HISTORY
These would tend to be in coastal areas The prevalent economies of scale made (LDPE, HDPE), polypropylene (PP) and so that raw materials and output could relatively small ethylene crackers and PVC — and the three main synthetic be economically shipped in and out of their derivatives unit commercially viable. fibres — polyamides, polyesters and terminals and ports, which would also In Western Europe in particular acrylics — had become major industrial be connected to rail networks. In the governments were anxious to establish products. US, petrochemicals production had national petrochemical industries so they The mass-selling polymers were already become concentrated in the encouraged the creation of relatively derived from ethylene, propylene Gulf of Mexico, the country’s centre of small petrochemical production centres, and butadiene, all products or by- oil and petroleum production. primarily serving domestic markets. products from refinery processes or In Western Europe, US oil companies, as This trend towards small-scale operations ethylene crackers. From ethylene came well as European ones such as Shell and was helped by the availability of a choice polyethylene, PVC, polystyrene and British Petroleum, were initially among of process technologies from a variety of polyethers and polyesters. Propylene led the main builders of petrochemical sources, including specialist engineering to polypropylene, acrylics, urethanes, plants, mostly adjacent to their refineries. firms (SEFs). With process technologies phenolic resins and polymethyl In the parts of the industry based on available on the licensing market at methacrylate (PMMA). Derivatives refinery-petrochemicals integration, a relative low cost, petrochemicals of butadiene included polybutadiene, petrochemicals production and marketing capacity was able to match buoyant styrene-butadiene rubber (SBR) and tended to be in the hands of the oil demand which with some chemicals nylon 6,6. companies, with the larger ones, was growing at double-digit annual Much of the impetus behind the demand particularly in the US, looking to expand percentage rates. for polymers and other petrochemicals their petrochemicals know-how overseas. In the 1950s through to the early 1970s was their relative cheapness, availability However, these oil-based petrochemical the petrochemical sector began to spread and their ability to replace existing players were coming under increasing beyond the industrialised world. It was materials because of their high competition from a group of dedicated the first sign of the globalisation of performance. Soon petrochemicals petrochemicals producers — Dow, the industry. Much of the impetus were being used as building components DuPont, ICI, DSM, BASF, Bayer and came from foreign direct investment and materials, automobile and other Hoechst. They were soon becoming much (FDI) by US companies in petrochemical transport components, household more powerful operators in the sector, projects in Latin America. Also the first products, parts of electrical appliances not only nationally but internationally. ICI petrochemical facilities were being built and as packaging materials. Initially, one was active in using its position as the in the Middle and Far East, although of the markets in which they made the leading UK producer to expand across on a small scale. biggest inroads was textiles. By the the world in British Commonwealth mid-1960s synthetic fibres consumption countries in many of which it used TECHNOLOGIES BECOME exceeded the combined total of natural technology transfers to establish embryo ABUNDANT (dominated by cotton) and cellulosic petrochemical industries. The petrochemical boom triggered a (mainly rayon) fibres. In both North America and Europe, lot of research and development (R&D) stand-alone units dedicated to chemicals into discovery of some new plastics but production, rather than a combination of much of the research effort was directed refinery products and chemicals, were at scaling up the production of already emerging, with the larger ones being invented polymers with the help of new run by the dedicated petrochemical and existing catalysts. By the 1960s across operators. the Western world the major plastics — low and high-density polyethylene
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CHEMICAL INDUSTRY HISTORY
With low-density polyethylene (LDPE), out of becoming highly independent “high severity” cracking furnaces, quench the two main producers initially during inventors. One of these was Ziegler boilers for rapid cooling of the furnace and after World War II were ICI and who despite being employed by the effluent from naphtha and gas oil crackers, DuPont using a high-pressure, high- German Max Planck Society determined the use of big centrifugal compressors temperature process based on the his own licensing policy and negotiated and flowsheets for the separation of free-radical polymerisation of ethylene. licensing agreements without lawyers, low-boiling light hydrocarbons. Similar In the 1950s German catalyst specialist while benefiting personally from the innovations were made in the production Karl Ziegler discovered a process using licensing income. of ammonia. For both chemicals, these alkyl aluminium compounds and titanium The success of state-funded research into breakthrough developments greatly tetrachloride as a catalyst to make new product and process technologies lowered production costs, increased high-density polyethylene (HDPE) at during the war prompted governments run lengths and greatly influenced the atmospheric pressure and close to to continue to be involved in R&D in flowsheets of other petrochemical ambient temperature. Ziegler discovered the chemical and other industries. The processes. a means of gaining chain reactions to result was the setting up of an increasing produce unbranched, linear polymers. number of chemistry and chemical His research was used as a basis for engineering departments in universities the discovery by Giulio Natta at Ferrara, and research institutes financed by Italy, of a catalysis system for producing state money — with a significant a polypropylene in which the location proportion of them doing research of the methyl groups on the polymer into petrochemicals. This broadened chain could be modified to control the the number of research networks in stiffness or elasticity of the plastic. The academia which petrochemical companies discovery enabled the Italian company were able to rely on as a source of Montecatini to start the large-scale innovation. commercial production of crystalline Scientists were able to take advantage isotactic polypropylene from the late of relatively generous research funds 1950s using what came to be called a to make discoveries of long-lasting Ziegler-Natta catalyst. But lack of money importance. Also, chemical engineers prevented the company from exploiting and equipment manufacturers were able other types of modified polypropylene to streamline production processes to developed by Natta. achieve much higher capacities. Many Both scientists — Ziegler and Natta petrochemical plants, especially in — were awarded the Nobel Prize for Europe, had capacities languishing in chemistry in 1963. By 2013 the family the tens of thousands of tons per year, of catalysts centred on the Ziegler- which in the longer term would prove Natta catalyst were estimated to be to be uneconomic. responsible for the production of around One important technological initiative 100 million tonnes of plastics, elastomers in the 1960s and early 1970s was and rubbers. the development of flowsheets and Such was the strength of demand for equipment to allow the construction new or improved technologies that of very large single-train plants for the some of the more talented scientists production of ethylene and ammonia. were able to make a good living With ethylene, this included the design of
15 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
LOGISTICS & SUPPLY CHAIN HISTORY
ADVANCES constructed during the war with a similar downstream chain gradually needed to IN LOGISTICS design and a deadweight capacity of be served by dedicated logistics systems. 16,613 long tonnes. After the war they Initially most petrochemical businesses Big advances in logistics during were used commercially with some to ran these themselves with their own World War II were to help meet the be converted to carry petrochemicals. transport and storage operation. But tremendous distribution requirements Trucks, with and without tanks, became it soon became more efficient and of the surge in demand for oil, fuels the essential mode on both sides of the less costly to outsource this work to and petrochemicals during the post- Atlantic, for short-haul transportation. logistics specialists who developed war economic revival. Virtually every Convoys of trucks carrying drums of their own expertise in the handling of means of transport was pushed to its oil, gasoline and lubricants supplied petrochemicals-derived products. maximum performance while scientists the fronts in the last years of the war. Chemical companies and oil producers, and engineers were pressed to achieve Tank trucks delivered fuels to airfields particularly those with petrochemical constant technological improvements. and to depots close to the front but activities, were able to take advantage of With its large amount of petroleum their main job was to distribute fuels the availability of wartime transportation refining capacity, most of the logistical to cities to prevent shortages. They ships and vehicles and distribution and technological advances occurred freed up railway tank car capacity for networks to market their products, in the US. long-haul transportation. particularly abroad. US companies were In response to the increase in the sinking It was a time when road transportation quick to expand in Western Europe by of coastal tankers by submarines, in worked 24 hours, seven days a week transporting their products in wartime the early 1940s the US embarked on and maintained the equivalent of a just-in- petroleum tankers, which could be what has been described as “one of the time schedule. To keep up with demand modified to carry petrochemicals and extraordinary feats of engineering in the manufacture of tank trucks in the US their feedstocks. World War II”. The oil transportation and had to be increased by around 60 percent If the Western European petrochemical construction industries were mobilised between 1942 and 1943. Despite the industry was to take advantage of the to build a 1,254-mile oil pipeline from development of new technologies to economies of scale available from the oil producing south of the country make synthetic rubber as an alternative producing chemicals from petroleum to the northeast coast with a load five to natural rubber, there was, however, it had to switch from coal to oil as the times bigger than existing pipelines. A a constant shortage of tyres. main upstream raw material. second even-longer pipeline of 1,475 Because of the lack of abundant Western miles was also constructed from the EVOLUTION OF European oil and gas reserves (with south to the northeast to carry gasoline PETROCHEMICALS SUPPLY the potential of North Sea hydrocarbon and other refined products. The projects CHAINS yet to be investigated), most of the required a great deal of newly designed The supply of feedstocks and raw region’s needs for oil and gas and for and developed equipment. materials to petrochemicals producers much of the refinery products had to Large quantities of fuel had to be required the development of increasingly be imported. That required investment shipped across the Atlantic, initially sophisticated logistics systems, including in port facilities for handling bulk liquid to Britain and the Soviet Union and transportation and storage facilities. cargoes and then distribution networks then to support the Allied invasion of Downstream from petrochemicals inland. Pipelines were to become a continental Europe. The solution was production were a growing army of major means of transporting oil the development of a fast method of converters, some of whom were and gas and also petrochemical building a standard tanker called the owned by the petrochemicals producers feedstocks like ethylene. T2 with its parts being welded rather themselves who had forward integrated than riveted together. Around 500 were into plastic products manufacture. This
16 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
LOGISTICS & SUPPLY CHAIN HISTORY
Germany, which was the most highly DEVELOPING SPECIALISED dependent on coal feedstocks of the MEANS OF TRANSPORT “The biggest major Western European countries, was At the same time there were a lot of by the early 1960s being supplied with relatively small ethylene derivatives oil by pipelines, mainly from Rotterdam. units located in stand-alone locations ethylene pipeline West Germany’s three large chemical which had to be supplied with ethylene companies — BASF, Bayer and Hoechst by tank trucks or rail tank cars. Ethylene, network in Europe — were able to move over to petroleum a colourless highly reactive, flammable feedstocks with the help of connections gas, is difficult to transport so it required was set up in to oil pipelines. specialist vehicles. In the 1950s, ICI Upstream feedstock pipelines in designed a high-pressure tank truck 1968 and started Europe were complemented by to supply its customers. An increasing ethylene pipelines in the region’s major proportion of tank trucks and rail petrochemical-producing areas. Similar tank cars were in fact manufactured operations in in concept to a pipeline network already to carry specific chemicals. In the US connecting petrochemicals sites in the tank cars were developed to transport 1970.” US Gulf, the biggest ethylene pipeline heat-sensitive chemicals with insulating network in Europe — named ARG urethane foam being used to maintain after the company running it (Aethylen- temperatures. Rohrleitungs-Gesellschaft) — was set up In the 1950s Dow pioneered the making THE BEGINNING by a consortium of ethylene users and of the first large tanker to exclusively OF CONTAINERISATION suppliers in 1968 and started operations carry commodity chemicals in multiple The fast growth in international trade in 1970 with the opening of its first tanks separated by double bulkheads in the 50s and 60s brought about such section between the German towns of with individual pipe systems. The tanker congestion in ports that ships were Gelsenkirchen and Dormagen. By 1974 had a carrying capacity of 16,000 long spending as much as half of their time it had been connected to nine other tonnes of chemicals. waiting for a berth and being unloaded sites in northwest Germany, Belgium This trend towards specialist ships and loaded. The freight industry response and the Netherlands. These included gave birth to the parcel tanker which to this dilemma was the introduction of Wesseling where it was connected with was considerably cheaper and more containerisation which was a concept an ethylene pipeline to Frankfurt and, in efficient for long-haul voyages than tested before the war but without 1980, a BASF pipeline to the company’s other chemical carriers. Its development success mainly because of a lack of main site at Ludwigshafen. The pipeline was spearheaded by Stolt-Nielsen, an standardisation. grid was eventually to be 490 kilometres originally Norwegian shipping company. First came the box container. A North long with a 117 km spur linking the port Parcel tankers, which were to comprise Carolina-based trucking company headed of Rotterdam with Antwerp. the majority of vessels classified as by Malcom McLean is considered to Other ethylene pipelines have been built chemical tankers, consisted of around have made the first ship voyage with in France connecting Marseilles with 30 to 40 tanks each of which had its own containers with a converted T2 tanker eastern France, which is also linked by pump so that the purity of liquid load carrying on its deck from New Jersey pipeline to the country’s north coast. In could be assured. But it also enabled to Texas 52 truck trailers detached from the UK an ethylene pipeline runs from the ship to bring back a similar load of their wheel chassis. Once they were Grangemouth in Scotland into northeast chemicals on the return trip making the unloaded in Houston they were placed England where it provides feedstock to vessel highly economical. on fresh running gear to be delivered the Teesside chemicals cluster. to their destinations.
17 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
LOGISTICS & SUPPLY CHAIN HISTORY
Gradually other cargo shipping operators GROWING COMPLEXITY OF followed the example of McLean with a CHEMICALS TRANSPORTATION “The social variety of containers. Then there were AND DISTRIBUTION lengthy negotiations in the shipping sector The growing complexity of chemicals not only on the setting of standards for the transportation and distribution elements of EPCA containers but also on the reconfiguring was requiring specialised knowledge of port facilities around the world. Box and came at a cost. So an increasing meetings have containers offered chemical shippers number of chemical producers opted the means of transporting relatively to outsource logistic services. Even oil always been part large quantities of liquids in drums, companies with chemical businesses which could be loaded and unloaded decided to concentrate on operating of the winning relatively quickly with scope for intermodal their own oil tanker and tank truck and transportation in the containers by trailer fleets but to contract out the truck or rail. transportation of their chemicals to deal.” There was even greater potential for independent hauliers. Certain logistics intermodal transportation in the tank companies tended to cover a relatively container, comprising a vessel of stainless wide range of chemicals and transport steel surrounded by an insulation layer modes. But then many of them focused of polyurethane and aluminium. It sits in on specific types of chemicals, especially a steel rectangular frame which enables those needing expertise to ensure they it to be carried by ship, truck or rail. The were handled safely and efficiently. first tank container was designed by a As international trade in chemicals London-based engineer in the mid-1960s. expanded, there were opportunities But the first tank containers were not for freight forwarders to organise for manufactured commercially until later petrochemical producers shipments when they complied with standards from the plant to the final marketplace. set by the Geneva-based International The management of newly formed Organization for Standardization (ISO). international supply chains was made The tank container was gradually to easier by advances in communications become a leading means of transporting both in terms of travel and in terms chemicals in international markets. But as of transmission of messages and an intermodal method of distribution in documentation. Europe it had to overcome the difficulties of rail networks being controlled by numerous national rail companies with different freight systems or track gauge.
18 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
EPCA HISTORY
THE BEGINNING in Europe was sown. Before calling it a petrochemicals has emerged as an OF EPCA night the group agreed to meet once industry of its own. Petrochemicals, as they were all back in Europe, in order an industry, is now only in its second It is 1967, one year before the summer to take this intriguing idea forward. decade. Its growth has been phenomenal of love in California and the student in the 1960s and the forecasts for the upheavals in Paris, two years before THE BIRTH OF EPCA future are such that we can still look Neil Armstrong takes that historic The scene shifts to Paris. It’s the 9th of at the industry as an infant. first step on the moon. The annual June, 1967, and in a meeting room of the Growth of this magnitude and the meeting of the US’s venerable National Hotel Royal Monceau, the initial group problems arising from such growth are Petroleum Refiners Association (NPRA), are joined by Robert Lavoir of Antar, now becoming apparent. Some of the whose roots date back to the year Huw Williams of ICI, Mario Tepsich of specific problems can be identified. There 1902, is underway and in full swing at Ftalital and Robert Boulitrop of Elf. After is the problem of the recognition of the the old Convention Centre in La Villita, a lengthy debate, this group agrees fact that petrochemicals is a distinct and San Antonio, Texas. that they will provide a forum where unique industry, there is the problem After a fulsome dinner a small group petrochemical people could meet, hold of communication within the industry of European petrochemical executives a meeting in October 1967 in the French as well as communication with those (Richard Kuhn of BASF, Dewey Mark town of Deauville, and use that occasion outside the industry, and there is the of Tenneco, Fred Plesman of Carbonit to launch “The European Petrochemical problem of industry representation and Eric Yates of Monsanto) meet in Association”. and posture before the rest of the a reflective mood. They contemplate Hardly four months after that fateful business world. The scope of these the fact that excellent as they are, decision 217 delegates attended the first business problems is such that it is the these NPRA meetings focus primarily EPCA meeting in Deauville, France, at industry’s responsibility to endeavour to on the concerns of refineries and not the Hotel Le Normandy from the 1st to find solutions. This, we suggest, is best the petrochemical industry. In terms of the 3rd of October, 1967. The organisers accomplished by a truly petrochemical industry size, this is to be expected; after had originally only expected 70 to industry organisation. all you can’t have the tail wagging the 80 delegates to attend this launch The conclusion of the meeting was that dog. The discussion moves on to address meeting of EPCA. The representation there was a strong desire to form EPCA the fact that the NPRA meeting, despite at this meeting included nearly all of on a formal basis to provide, amongst its global overtones, mainly deals with the major companies involved in the other areas of activity, a forum where issues affecting the US industry, again production of petrochemicals plus petrochemical industry people could to be expected. Yes, there is a place at many of the service groups to the meet and discuss common issues the NPRA for the global petrochemical petrochemical industry. One of the or concerns. The meeting included family to meet — but is this enough? founders of EPCA attending that first representatives of Logistics Service As the evening wears on a glimmer meeting later said that he ‘had never Provider companies, and from the start, of an idea comes into focus. Isn’t seen so many decisions made in such EPCA has recognised the importance what is needed a particularly unique a short period of time’. of the logistics segment in achieving meeting focused specifically on the Eric Yates, one of the founding fathers business success. petrochemical industry? Would not of EPCA delivered the keynote address Europe be an appropriate region to set at this initial meeting. He outlined some that up? Those sitting around the table of the aims of the proposed association all nod enthusiastically; and it is in that as follows: moment that the seed of a distinctive “From its basic origin as a satellite of the petrochemical industry association based petroleum, coal and chemical industry
19 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 2 — Economic Recovery Drives Chemicals Demand - From World War II to the 1960s
EPCA HISTORY
Following the consensus view at the The successful Deauville meeting set Deauville Meeting, work proceeded the scene for EPCA as a “platform” via during 1968, and involved the drafting the organisation of annual meetings of the Articles of Association under allowing for networking and exchange Belgian law and consultation with a wide of information. Following the original range of companies to ensure that the successful meeting in Deauville, meetings proposed Articles were acceptable to were held in Knokke, Belgium in 1968 both European and American companies with 290 present and in Wiesbaden, active in Europe. By the end of 1968, Germany in 1969 with 350 people present, the Articles had been drafted, agreed by each time with increasing attendance. companies and accepted by the Belgian The social elements of EPCA meetings authorities. On December 27, 1968 the have always been part of the winning Articles were signed by the King of the cocktail of what EPCA has been about. Belgians, and EPCA became a formally The social sessions such as events (tennis, established Association. golf, fun run, later to also include sailing), The EPCA Articles of Association indicate opening cocktail events, Committee that EPCA has as its objective to provide luncheons and gala dinners offer ample for an efficient means of communication opportunities for networking and informal aiming at the exchange of opinions conversations, both about the topics and experiences and the realisation under discussion in the formal session of comparative studies in the scope of and also around individual business the petrochemical industry. discussions and deals. It is perhaps worth noting here that EPCA has always been, since its conception, financed by modest membership fees paid by member companies and by income from meetings and has never sought extraordinary financing. It was also clear that any representative or spokesman role for the Association could cause difficulties for national federations (when EPCA was founded, the European Chemical Industry Council (Cefic) in its present role did not exist), and it was therefore decided in 1969 and written in the bye-laws that EPCA would not have a representative role. This has been confirmed several times up to today.
20 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY CHAPTER 3 OIL PRICE SHOCKS, EMERGING ECONOMIES AND ENVIRONMENTAL REGULATIONS THE 1970s AND THE 1980s
21 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
CHEMICAL INDUSTRY HISTORY
MARKET increases without any severe damage distribution to small volume customers. TURBULENCE to their level of sales or profitability. This It was also a time when companies had AND INDUSTRY was mainly because the first reaction to decide what their core businesses of their customers was to raise their were. Some companies, particularly REORGANISATION inventories in the expectation that the oil companies, focused more on base oil prices might go up to even higher products by concentrating on their OIL PRICE SHOCKS levels. So, demand among converters advantages in upstream integration. By the early 1970s some petrochemical and chemical industry customers went Others moved downstream by shifting producers in North America and Europe up. But trends further downstream their portfolios into added-value were almost convinced that the era of among customers close to or providing petrochemicals products. Some went buoyant demand and relative economic products direct to consumer markets further by investing in non-petrochemical stability would never end. But this were indicating that difficult times lay speciality products. In Western Europe, optimism was battered by the effects of ahead. in particular, petrochemical business an Arab oil embargo in protest against Soon lower consumer demand was focused more on forging closer links US support for Israel in the Yom Kippur beginning to impact manufacturing with their customers. This frequently war. The Organization of the Petroleum output. The economic outlook involved providing more technical Exporting Countries (OPEC), which darkened as wages were squeezed and and backup services. after being formed in 1960 accounted unemployment increased. Inflation also Price rises in the late 1970s which doubled for a third of world energy production started rising. Even before the first oil the cost of crude oil had a much bigger by 1970, then first started to show its price hikes, the industry was suffering impact on the petrochemical industry strength as a cartel. The result was from overcapacity due to a surge of because they were not compensated a steep rise in the oil price from investment in petrochemicals because for by higher demand from increases in around $3 to $20 per barrel within a of the optimism about future demand. inventories. The petrochemical industry few weeks in October 1973. With demand starting to weaken, the now began to realise that volatile oil prices At the time of the overthrow of the excess worsened. and fluctuating feedstock costs were Shah in Iran in 1978/79 followed by the Yet demand was strong enough to becoming a permanent phenomenon Iran-Iraq war in the 1980s which led to result in some petrochemical plants which required radical adjustments in production cuts in two major oil exporting achieving above 90-percent utilisation business strategies. The industry and its nations, the oil price had shot up again rates. Petrochemicals output in Western customer sector were being battered by to $30 per barrel, a tenfold increase Europe, although declining, remained an economic storm caused by a sharp in seven years. The two shocks had a well above the levels of overall industrial global economic downturn and even devastating impact on the economies of production. Consequently some producers higher inflation. both developed and developing countries were confident enough about the future with a big drop in economic growth, to continue to invest in additional capacity. THE INDUSTRY REORGANISES high inflation and high interest rates. The Yet at the same time they had to cut costs. ITSELF underlying certainties of the last two This was a challenging task especially for Meanwhile the industry had to struggle decades of high economic growth and those which had only recently switched with an even worse imbalance between continuous strong demand disappeared. from coal to oil-derived feedstocks, which supply and demand caused by excess For petrochemical businesses, the they had expected would give them capacity. Petrochemicals no longer dramatic change required new approaches more leeway with costs. One response enjoyed demand rates which put levels of and strategies. was to reduce expenditure on research output well above those of total industrial Most petrochemical companies managed and development. Another was to make production. to go through the first bout of oil price savings in logistics by stopping direct
22 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
CHEMICAL INDUSTRY HISTORY
For the first time since the petrochemical capacity in man-made fibres, which was and vital technological support from revolution hit Western Europe in the aided by a relaxation of competition US, Western European and Japanese early 1950s, petrochemicals production rules by the European Commission. petrochemical companies anxious at a rates were around the same as overall In polyester, both ICI, a pioneer in the time of high oil prices to gain access industrial output. Western Europe also had development and commercialisation of to cheap feedstocks. to withstand the effects of overcapacity the polymer, and Bayer withdrew from The most ambitious and fastest expanding elsewhere. The US was exporting large the sector with ICI instead concentrating of the new operators in petrochemicals amounts of excess polymers and man- on nylon and Bayer on acrylic. were oil producers in the Middle East made fibres. In France the government intervened to Gulf, who, with the exception of Iran, built A substantial proportion of plants needed help the chemical sector. Rhône-Poulenc, plants mainly to export bulk polymers to be closed down, particularly among whose petrochemicals operations were and intermediates, mainly to Asia. Since ethylene crackers and derivatives units. mainly in bulk polymers and synthetic most of the petrochemical schemes were Some of them were, but from the view fibres, had to divest its commodity joint ventures with Western companies, of the investors not enough of them. In chemicals assets mostly to the state- the output of the plants was shared newly liberalised financial markets financial owned Elf oil company with the objective with their partners. institutions were exerting much more of forming an operation which could In 1974 Saudi Arabia gained control of muscle and imposing new disciplines compete internationally. Then in 1982 its main oil company, the US-owned on manufacturing and other companies, Rhône-Poulenc was itself nationalised Arabian American Oil Company (Aramco), often forcing them to take far reaching after it recorded losses. which was renamed Saudi Aramco. After measures to improve profitability. The In the mature markets of the US responsibility for petrochemicals was industry did try to reorganise itself, and Western Europe the pressure to transferred from the oil ministry to a newly particularly through mergers and restructure began to ease considerably created industry and electricity ministry, acquisitions, joint ventures and in the mid-1980s as oil prices declined the task of setting up the country’s portfolio swaps. steeply. Feedstocks became cheaper and petrochemical industry was given to In the European PVC sector, for example, demand picked up again. Investment in the majority state-owned Saudi Basic BP moved its PVC interests to ICI, which new capacity rose. Inevitably the issue Industries Corporation (SABIC) founded in turn relinquished its polyethylene of intensifying global competition and in 1976. operations to BP. Later in 1985 ICI and excess capacity would soon, however, Within a few years SABIC was negotiating Enichem of Italy merged all PVC activities return. six joint venture projects with Shell, Dow, into a single joint venture. Exxon, Celanese and Texaco Eastern, At one point such little progress was EMERGING ECONOMIES ENTER Mobil and a Japanese consortium which being made in closing uncompetitive THE PETROCHEMICAL MAP were scheduled to come on stream plants that the industry, through Cefic, As the economies of the developed world in the early to mid-1980s in Jubail and asked for help from the European — North America, Western Europe and Yanbu. By 1985 SABIC had a total output Commission, the EU executive. The Japan — were being hit by stagflation, of 6.3 million tonnes. Commission and Cefic drew up a joint the spread of petrochemicals production For Middle East producers a large importer report recommending cutbacks based accelerated across the developing world. of their petrochemicals was China which on volumes of output rather than low The oil producing countries were the from 1979 gradually switched to market efficiencies. The report failed to gain pacesetters because of their plentiful principles and opened the country to enough support in the industry to be oil-based feedstocks and abundant foreign investment. China endeavoured initiated. funds from rising oil revenues to allocate to offset rising chemical imports by the However there was more success with a to petrochemical projects. Also they production of its own petrochemicals rationalisation scheme to reduce excess were able to attract investment money and other chemicals.
23 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
CHEMICAL INDUSTRY HISTORY
By the mid-1980s chemicals were to cut costs, the trend was towards the THE LAUNCH OF RESPONSIBLE accounting for 5 percent of its exports. building of larger plants — crackers and CARE By 1990 it had a total ethylene capacity polyethylene and polypropylene units. of nearly 2 million tonnes, the largest in Asia outside of Japan. TOWARDS A GREATER Singapore was another country in Asia, ENVIRONMENTAL AWARENESS although virtually a city state, to move Together with the financial pressures of quickly into petrochemicals to take the economic turbulence of the 1970s The proliferation of regulations on both advantage of its position as a hub for and 1980s, petrochemical producers had sides of the Atlantic prompted the oil and downstream products in the to contend with the imposition of much chemical industry to be more pro-active in region. Also it was able to exploit the tougher environmental regulations. In anticipating legislation and in reinvigorating feedstocks from several refineries on some cases these were prompted by the the concept of self-regulation, particularly the island, which ranked it as the world’s need for governments to take action in since the chemicals sector was now third largest refining centre after Houston response to a growing public awareness suffering from a dismal public image and Rotterdam. about the importance of environmental regarding protection of the environment Petroleum Corporation of Singapore protection. This led to the creation of and human health. (PCS), a petrochemicals complex whose political groups like the Greens in Europe Regulatory compliance was being seen leading owners were Shell and a Japanese and highly active environmental non- by many petrochemical companies as consortium led by Sumitomo Chemical, governmental organisations (NGOs) not being sufficient. Keeping ahead of opened a 300,000 tonne-a-year cracker across much of the industrialised world. possible legislation became part of their in 1984 for the production of a range of In 1983 the Green Party entered the competitive strategy. It improved not derivatives which were mainly exported German parliament (Bundestag) for only their reputation but also profitability to elsewhere in Southeast Asia. the first time. Germany as a result took because the development of new safer In Latin America private enterprises, on a leadership role in environmental technologies and processes, for often backed by foreign investment, policy in Europe, similar to the position example, also led to greater production had instigated many of the region’s first of California in the US. efficiencies. petrochemical projects. In the 1970s In addition to pressure from economic A major boost to the chemical industry’s Latin American governments started to downturns triggered by oil price increases, image came with the introduction of extend their reach into petrochemicals. In petrochemical producers had to more Responsible Care, a self-regulatory Mexico, Chile and Argentina production and more comply with environmental programme initiated by the Canadian of base petrochemicals was reserved regulations, initially developed in North chemical industry in 1985. Its objective for state-owned schemes. America, Western Europe and Japan. was to promote codes in areas like the The driving force behind a series of safety of communities near chemical NEW CATALYSTS FOR regulations was a number of accidents plants, pollution prevention, distribution CUSTOMISED PRODUCTS and disasters involving chemicals from and process safety, employees’ health The main focus in R&D was on the the mid-1970s to the mid-1980s. The and safety and product stewardship. development of improved polyolefins. industry took into account the general Responsible Care was soon adopted as These were still the main product category public’s expectations and was willing a condition of membership of chemical in petrochemicals in terms of sales and to actively implement measures in order trade associations in the US and across profitability. A major breakthrough came to avoid accidents and to adopt new Western Europe and eventually was in the late 1970s with the development of regulations. being embraced by chemical industry linear low-density polyethylene (LLDPE). organisations across the world. In order to satisfy the relentless need
24 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
CHEMICAL INDUSTRY HISTORY
It became a big contributor to a gradual the relatively mature market of Western processing of alpha-olefins mainly for improvement in the image of the industry Europe ethylene consumption tripled the production of surfactants involved globally and is now a crucial part of the between 1970 and 1985. In the 1970s the combination of four reactions, each chemical industry’s DNA. world output of non-cellulosic fibres of which was already known, at least also tripled. as a concept. ECONOMIC TURBULENCE With new plants, the emphasis was Metathesis, a technology for interchanging SQUEEZES RESEARCH AND on increasing the size of the units to olefins, was revived in the 1980s as a DEVELOPMENT FUNDS make them far more economical. The reverse process to react ethylene and In the 1970s the petrochemical sector advances made previously in plant 2-butene to make scarce propylene. The entered a period in which there were components and equipment and in technology was discovered in World few big R&D breakthroughs in the flowsheets provided a basis for the War II but only to convert what was development of new products and design of much larger facilities, with then cheap propylene into ethylene. processes. In the midst of the economic some reaching annual capacities of In 1984 Lyondell of the US built a unit uncertainties triggered by the two oil 500,000 tons or even bigger. By 1975 to produce propylene in this way, with shocks, research budgets were a victim a newly designed 200,000 ton-a-year 2-butene being derived from ethylene of the priority given to saving money facility had a manufacturing cost which so the whole process was actually and cutting costs. Also most of the was per ton two thirds cheaper than a ethylene based. major technological advances based much smaller unit in 1955. Processes were also being developed on the manufacture of petrochemicals The larger the plant the more ‘shut- and whose significance was not fully from petroleum feedstocks had already down’ economics applied — in other realised at the time. Mobil Chemical, been achieved. words a new advanced process would for example, developed aluminosilicate Linear low-density polyethylene (LLDPE) not have sufficient economic benefits zeolite (ZSM) catalysts which it first — the last of the new major bulk polymers to justify closing big units which already used to make gasoline from methanol — was discovered by Union Carbide in the had major advantages of scale. in New Zealand. This technique for US in the late 1970s and commercialised in converting methanol into hydrocarbons the mid-80s, as a stronger, more versatile PROCESS INNOVATIONS DESPITE eventually led to the development of and above all lower cost version of LDPE. TIGHT R&D BUDGETS methanol–to-olefins (MTO) technologies. Union Carbide opted for a licensing strategy As a result, research teams found it Aluminosilicate zeolite noble and non- for its Unipol LLDPE technology so that the increasingly difficult to obtain board noble catalysts are now also used in new polymer became available relatively backing for R&D projects into new styrene production, other aromatics quickly throughout the world. processes. Nonetheless there were a processing, catalytic dewaxing and At a time of narrowing margins, the number of key process innovations other applications. efforts of researchers were focused such as the development of ethylene mainly on making improvements oxychlorination for the processing of to processes to reduce energy hydrogen chloride in the making of consumption, increase yields, raise vinyl chloride and the production of feedstock efficiencies, and find other acrylonitrile via fluid-bed oxidation of ways of cutting costs. propylene. Despite the poor economic conditions, Other process innovations were based additional petrochemicals capacity was on the modification of old knowledge continuing to be built, albeit at a slower to achieve new results. The Shell higher rate. A major impetus was coming from olefins process (SHOP) which was continued strong demand. Even in adopted throughout the world for the
25 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
LOGISTICS & SUPPLY CHAIN HISTORY
LOGISTICS BECOMES The new parcel tankers segment MORE SPECIALISED was quick to invest in new ships and “EPCA’s History equipment because it provided an The two oil shocks in the 1970s made opportunity to take a majority share in business difficult for logistics companies the chemical tanker market. Because of a is the story of a in the chemicals sector. They had to cope reluctance to invest in transportation, the with steep rises in fuel costs, high inflation tonnage of tankers owned by chemical passionate journey.” and fluctuating demand for their services producers steadily achieved an average among both petrochemical producers age which made them uncompetitive and users. On the other hand they were with independent tanker operators. able to benefit from acceleration in However, the result was a high level outsourcing of logistics. For producers, of concentration in the sector, which contracting out transportation services despite anti-trust court action in the US was a way of reducing their own costs. continues to the present day. Stolt-Nielsen and Odfjell were left as Also, it released them from the burden In the mid-1970s the three main players the two leaders of the parcel tanker of having to invest in the improvements were meanwhile US-headquartered sector. But they became three when to the technologies and organisation of Stolt-Nielsen, Norway-based Odfjell Odfjell was split between two branches transport, storage and communications and UK-located Panocean, an Anglo- of the Odfjell family with one setting up systems in the logistics chain. Norwegian joint venture. Despite low Jo Tankers to become the third leading One of the reasons for the need for freight rates, all had been investing player in the deep-sea parcel tanker these improvements was that safety and in new up-to-date capacity. market. Fast forward: In July 2016, environmental regulations, introduced However, Panocean, which had become Stolt-Nielsen announced to acquire Jo mainly in response to accidents, were financially stretched as a result of Tankers for $575 million. starting to put pressure on the logistics takeovers and the buildings of new ships, The demise of Panocean caused by sector. New regulations had a particularly halted any further investments while the reluctance to invest in modernisation of strong impact on the shipping industry. other two continued to put money into assets was also one which threatened In the early 1970s the United Nations’ new designs and technologies. In fact companies in other logistical sectors. In Inter-governmental Maritime Consultative Stolt-Nielsen was so short of money times of tight margins stemming from low Organization (IMCO), whose name that it had to borrow $50 million from average growth in sales, petrochemical was changed to International Maritime British Petroleum (BP) in return for a shippers wanted to use logistical providers Organization (IMO) in 1982, introduced share option in the shipping company. which were able to offer greater efficiency rules for the construction and equipment After Panocean with its out-of-date fleet but at a lower cost. of ships carrying dangerous chemicals in was unable to benefit from a shortage of bulk. The rules, which divided chemical tonnage after some tanker owners failed LOGISTICS COMPANIES EXPAND carriers into three categories according to meet the new IMCO rules, two major INTO SERVICE AREAS to the degree of hazard of their cargoes, shareholders in Panocean, P&O shipping In the US rail tank car sector the leaders were extended to all chemical carriers line and the UK sugar group Tate & Lyle, were investing heavily in innovative in operation in the late 1970s. Ships decided to pull out of the parcel tanker rolling stock designed to meet the needs were inspected regularly (e.g. by CDI sector. In late 1982 Panocean agreed to of specific groups of customers. In both Marine) to ensure they were complying merge its fleet with Stolt-Nielsen. But by North America and Europe, operators of with the obligatory standards which in 1986 Panocean had effectively withdrawn tank trucks, trailers and containers were addition to equipment also applied to from the tanker market altogether to focus offering more sophisticated equipment, the competence of crews. on its business in bulk liquids terminals. often after merging with competitors.
26 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
LOGISTICS & SUPPLY CHAIN HISTORY
In Europe the haulage market started to Most had insufficient roads and bridges, fragment between large contractors and sub-standard rail networks and inadequate smaller operators who often acted as port facilities. A US government survey sub-contractors serving local markets. of China’s transportation system in the But at the same time there were mid-1980s reported an inadequate road opportunities in niche segments and and rail network which could not meet in providing a wider range of services. The the supply and distribution needs of the logistics umbrella increased considerably country’s ports. There was also a lack in size to cover a wide range of activities of vehicles able to handle large loads, — such as demand forecasting, packaging, particularly of bulk liquids. China’s rail labelling, blending, preparing mixtures, operations had a shortage of freight documentation flows, and customer rolling stock. management services. Foreign markets Even in the Middle East ports became were also providing another opening. quickly congested as transportation There could be big difficulties, however, infrastructure failed to keep pace with the in dealing with low-standard infrastructure expansion of petrochemicals production in the emerging economies which capacity. There was a limited road network were endeavouring to create economic in the Arab countries in the Gulf and structures for the export and import of virtually no railways. both petrochemicals and petrochemical derivatives.
27 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
EPCA HISTORY
THE STATE OF petrochemical companies’ calendar. distribution issues, plus the increasing THE INDUSTRY For the following years and through pressure on numbers and space at the the 1980s, Venice and Monaco would EPCA Annual Meeting, came together In 1970, the EPCA Meeting was held in be EPCA’s favourite venues for holding to create the environment for a specific Venice for the first time, and the Italian the Annual Meeting. EPCA Distribution Meeting. lagoon city that is famous for its canals In what has become a hallmark of the and bridges was to become EPCA’s NEW CHALLENGES, Association over the years EPCA leaders prime “home” for a number of years. ACTING RESPONSIBLY had the sensitivity and flexibility to organise The inimitable ICI Senior Executive John As the 1980s drew to a close the issue the first EPCA Distribution Annual Harvey Jones, concluded his remarks of environmental protection and Meeting in Venice, in October 1974, during this Meeting with the statement: responsibility noticeably grabbed approximately a month after the EPCA “I think there will be a shake-out in the the attention of European societies, Annual Meeting, which also took place petrochemical business, the like of which was reflected in the rise of Green in Venice. which we have never seen before, and Parties, throughout the continent. Never This timing gap of about one month it really will be the mating of dinosaurs: one to be left behind EPCA recognised remained a part of the petrochemical it will be heard all over the world, and at the importance of this debate to the industry’s calendar until 2006, when the the end of the day I think we will have petrochemical industry in general and two meetings would finally be merged a worse industry than we have now”. to its members particularly, hence the into one. The first Venice meeting attracted close 23rd EPCA Annual Meeting was held in That first EPCA Distribution Meeting to 500 delegates and, for the first time, Monte Carlo, at the end of September dealt with crucial issues of the day, while there was an indication of pressure if 1989 under the theme ‘The Petrochemical showing the foresight to look ahead and numbers increased, something that Industry and the Environment’. grapple with key themes of the future. It had been a dominating theme and a The conclusion was that “safe and focused on growing concerns regarding sign of EPCA’s success until the end of environmentally compatible production will maritime safety and pollution regulations the 1990s. It was becoming clear that be as decisive as equally environmental- and the response of the different sectors the number of venues in Europe that friendly application and disposal. The of the petrochemical distribution supply could offer the space and the quality environmental impact of a product chain to these issues. Many of the required was limited and it was not throughout its full life cycle will become themes and debates tackled at this possible to rotate around all the major a factor in completion”. inaugural EPCA Distribution Meeting European countries. Therefore, in 1971, In addition to the Annual Meetings, in informed and fed the sustainability the concept of the “host country” the 1980s EPCA held seminars on a and environmental agenda, which was developed and implemented. In wide range of topics, amongst others would become a staple element of the holding meetings in a limited number “Reducing Uncertainty (Information)” petrochemical bulk distribution world in of venues, a different country would in Cannes in February 1989. the years and decades to come. act as host to project an image of their culture and business approach. So, at THE BIRTH OF EPCA COMMON SAFETY STANDARDS the 1971 meeting, held in Venice for DISTRIBUTION From the outset delegates called on the second time, Great Britain was the By 1974 it was clear that the logistics EPCA to broker a common set of safety first recorded host country. The 1972 and distribution sections of the European standards that would be acceptable to meeting, for the first time in Monaco, petrochemical industry needed their own both the producing and distributing arms was followed by two more years in distinctive forum. A growing desire from of the petrochemical industry. Venice. EPCA had truly arrived as a the petrochemicals logistics sector to have significant business meeting on the a meeting which dealt specifically with
28 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
EPCA HISTORY
Attendees alighted on a visual image development of Responsible Care. in the Port of Antwerp had grown from 2.3 of two arms working together, for the As a concluding statement in 1977 the million tonnes in 1972 to reach 7.3 million betterment of the industry as a whole. EPCA General Committee Member F. tonnes by 1982, which had significant Corporate cultures, standardising safety J. Plesman said: ‘The image of society consequences for the petrochemical language and different interpretations of and therefore the chemical industry, in distribution sector. safety regulations also came into focus. my mind, is created within families, There was a growing recognition that schools and universities. I feel there is EPCA SETTLES INTO OFFICE societal concerns regarding environmental a task for the industry to work in these Until 1974, EPCA was organised by a issues can only rise rather than areas.’ This is what EPCA has actively group of willing volunteers working decrease in the coming years and so taken up since and is continuing to for major companies and prepared to the petrochemical industry has to be this very day. devote some of their company’s (and seen to be acting responsibly. much of their own) time to making On the 23rd of October 1974, D.R. INCREASING TRAFFIC AND THE EPCA happen. With the start of the Hunter of Cefic, commented, ‘We don’t NEED FOR REGULATION Distribution Meeting and initiatives conduct our business at the expense of Meanwhile, in the early 1980s, the being taken in a number of other areas, safety’, setting a tone which the EPCA EPCA Distribution Meetings were it was becoming necessary to put the Distribution Meeting would strive to dealing with the fact that the overall organisation on a professional basis. uphold and promote in the coming field of industrial product transport was In 1974, Eric Yates, who had worked in the years and decades. reeling from a series of accidents and petrochemical industry since 1956 with pollution incidents, such as the Torrey ICI at Wilton and in Frankfurt, and with STRAIGHT TALKING IN BRIGHTON Canyon, the Amoco Cadiz, Flixborough Monsanto in Brussels, was appointed By the fourth EPCA Distribution Meeting, and Seveso, being the most high profile permanent Director, a post he held until which took place in Brighton, England incidents. Even though few of these 1998, and an office opened in Brussels. in 1977, EPCA showed a capacity to incidents directly involved petrochemical In 1976, EPCA bye-laws were voted deftly respond to the demands of its distributors they still had an impact on upon by the Ordinary General members in offering both technical and how the sector was perceived. The Meeting completing the EPCA detailed micro-industrial information while EPCA Distribution Meeting was even Articles of Association. These bye- also addressing macro-societal issues, more aware of its remit to provide a laws excluded EPCA from representing going beyond the direct production and true, fair and balanced picture of its the petrochemical industry to third distribution of petrochemical products to members’ activities, in the teeth of parties, making declarations binding explore how the petrochemical industry this negative publicity. the industry or expressing the opinion is viewed in wider society. The area of regulation continued to of the industry. The meeting agreed ‘that the public be a major concern for the EPCA They also provided for the formation image of chemical distribution can and Distribution Meeting, especially regarding of an Executive Committee as well must be improved’. It was also noted that the implementation of the MARPOL as sub-committees. The Distribution the ‘exceptional safety record of the Convention, which came into force a Committee, later called the Logistics industry is practically unknown’. These couple of weeks before the 10th EPCA Committee, was established in that sentiments expressed at this early EPCA Distribution Meeting in October 1983. connection from 1974 on to propose Distribution Meeting sowed the seeds The rise in the volume of container programs and speakers for the EPCA for what would become a massively traffic was another key area, addressed Distribution Meetings and propose to proactive sustainability effort and a crucial by the EPCA Distribution community in the General Committee projects of part of the petrochemical distribution the early 80s. In the 1984 Distribution interest to the chemical industry in the sector’s contribution in Europe to the Meeting it was noted that container traffic distribution segment.
29 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
EPCA HISTORY
This Committee would prove to be very In 1975, EPCA commissioned a active over the years. major study on price reporting in the Since EPCA has, as members, all major petrochemical industry. In the introduction producers and most of the major service to the study, the consultants performing groups to the industry, it was well the study, Commodities Research Unit, placed to develop a range of ideas of said that “The Petrochemical Industry benefit to the industry, but which did is the only major raw material supplying not conflict with the fact that EPCA industry that does not have a regular could not represent the industry. price reporting system.” Since that time EPCA, with its conceptual origin in of course major price reporting systems San Antonio, has always had close and have been set up and are widely used friendly links with NPRA. To ensure close by the industry. EPCA can perhaps collaboration, the EPCA Director sits take a little credit for initiating a major ex-officio on the NPRA Petrochemical discussion on the subject. Committee and the NPRA President At the 1972 Annual Meeting in Monaco, sits on the EPCA General Committee. a team led by John Tholen of ICI launched With the Latin-American Petrochemical a proposal for a benzene futures market, Association (APLA) being formed in 1976, and the presentation was the only time a similar relationship was established that there was standing room only at and the EPCA Director sits on the APLA an EPCA Meeting. The proposal was Executive Committee, and the APLA not taken up by the industry, but the Secretary General is an ex-officio member debate it started clarified much thinking of the EPCA General Committee. in the industry on the subject. Also, shortly after Cefic was formed in The Chemical Cargo Inspection 1972, the Cefic Director General was Association, a sub-association of EPCA, invited to sit ex-officio on the EPCA was formed in 1986 to provide a forum General Committee, a practice that for discussion for inspection companies, has continued to the present day with and to work towards standardisation mutual benefit. of inspection procedures.
30 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 3 — Oil Price Shocks, Emerging Economies and Environmental Regulations - The 1970s and the 1980s
EPCA HISTORY
EPCA PRESIDENTS EPCA VICE- EPCA TREASURERS PRESIDENTS 1970 – 1973 1975 – 1978 1970 – 1977 E. R. YATES T. D. OVERTON F. J. PLESMAN MONSANTO BP CHEMICALS CARBONIT Belgium United Kingdom The Netherlands
1973 – 1975 1978 – 1981 1977 – 1980 B. VERKAAIK G. VAN DER SCHUEREN A. J. METZLAR N.V.C.P. PETROCHIM NIEUWE MATEX The Netherlands Belgium The Netherlands
1975 – 1977 1981 – 1982 1980 – 1983 C. CAPITANI H. U. FINTELMANN M. J. COOPER ANIC HOECHST AG PANOCEAN-ANCO Italy Germany United Kingdom
1977 – 1980 1982 – 1984 1983 – 1985 R. ROSE C. PAYÁ J. C. VERCHIN RHÔNE-POULENC ENFERSA ATOCHEM France Spain France
1980 – 1982 1984 – 1987 1985 – 1988 M. E. ROBINSON H. BJØNTEGÅRD T. LINAAE ICI DYNO INDUSTRIER STOLT NIELSEN SHIPPING United Kingdom Norway Norway
1982 – 1984 1987 – 1989 1988 – 1989 J. T. QUANT G. PORTA C. BOSMAN SHELL MONTEDISON CHEMGAS The Netherlands Italy The Netherlands
1984 – 1987 C. PAYA ENFERSA/HISPANOIL Spain
1987 – 1989 H. BJØNTEGÅRD DYNO INDUSTRIER Norway
31 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY CHAPTER 4 GLOBALISATION TRANSFORMS THE INDUSTRY 1990 TO 2009
32 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
PETROCHEMICALS help of Western partners. These plants harmonised laws on non-tariff issues GROWTH IS BEING primarily aimed at import substitution like rules on safety and environmental SPARKED but, in the Middle East especially, their protection. objective was to serve export markets. The North American Free Trade Agreement Globalisation was not a new With internal and international trade in (NAFTA) came into force in 1994 with phenomenon. In fact historians see petrochemicals increasing significantly, the objective of creating a trilateral it as a trend which has been repeated the logistics of the industry became even trading bloc comprising Canada, USA throughout the world’s economic history. It more important. Global transportation and Mexico. In South America, Mercosur, tends to come in cycles. The globalisation and distribution networks were a bloc to encourage free trade, was which started in the second half of required. Logistics were considered set up in 1991 with five full members the 20th century is regarded as being within a holistic approach embracing — Argentina, Brazil, Paraguay, Uruguay a process which returned the world to the whole supply chain — covering and Venezuela. the global economic integration which raw material suppliers, the producers, In the Middle East the Gulf Cooperation was interrupted by World War I, the downstream customers and end-users. Council (GCC), an alliance formed in depression and trade protectionism of 1981 between the six Arab Gulf states the 1920s and 1930s and then World PETROCHEMICALS GROWTH — Bahrain, Kuwait, Oman, Qatar, Saudi War II. What made the globalisation BOLSTERED BY INTERNATIONAL Arabia and United Arab Emirates (UAE) — which became a predominant force FLOWS OF CAPITAL started the creation of a customs union in the 1990s different was its speed. The pace of the building of plants in 2003. The Association of Southeast This was mainly due to the opening and infrastructure in petrochemical Asian Nations (ASEAN) with 10 member up of previously closed markets like sites and complexes across the world states with a total population of 625 China. But it also would not have been quickened considerably. A big driver million, agreed in 1992 to phase out possible without modern transport and behind this expansion was the Western tariffs to expand the “region’s competitive communications. petrochemicals producers and SEFs advantage as a production base geared International petrochemical companies who, like other Western manufacturing for the world market.” have taken unprecedented opportunities sectors, set up the basis for globalisation Most of the world’s leading petrochemical to invest in bulk chemical capacity in through big increases in levels of foreign producers stepped up their foreign emerging economies to take advantage direct investment (FDI). investment, particularly in China and of the rapid economic growth and the A major impetus behind increased FDI elsewhere in Asia and in the Middle lower production costs of these countries. was trade liberalisation. The World Trade East. The attraction was not only high The objective was to use this capacity to Organization (WTO) came into operation growth rates but also the advantages of serve thriving local markets, the needs in 1995, based on an agreement signed having local plants to supply the factories of Western downstream manufacturers by 123 nations which replaced the of Western manufacturers which had also investing in local production plants General Agreement on Tariffs and Trade also been investing in the emerging and to export chemicals back home. In (GATT). The WTO’s main remit was the economies. Europe, in particular, the proportion of elimination of protectionism and the A sign of how much the petrochemical total capital expenditure being allocated promotion of fair trade. industry was becoming globalised was to projects abroad, especially Asia, rose Trade liberalisation was encouraged the extent of investment by the leading significantly. on a regional basis by a series of pacts petrochemical operators of the newly At the same time domestic petrochemical and initiatives. The European Union’s industrialised world investing in the producers in emerging economies Single European Act (SEA) began to be old one — such as Taiwan’s Formosa were investing heavily in their own implemented in the early 1990s with the Plastics, Westlake in the US, and Saudi capacity, often with the technological aim of establishing a single market with Arabia’s SABIC in Europe.
33 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
North America and Europe rapidly lost had around 85 PVC producers and FRANZ FISCHER share of the world’s petrochemicals over 80 polypropylene makers while (1877-1947) and chemicals market, especially in the numbers of polyethylene and polystyrene German chemist who 2000s. The US’ and the European Union’s producers were 20 to 30. in 1925 together with share of world chemicals sales, a high China’s joining of the WTO in 2001 Hans Tropsch developed a catalytic proportion of them petrochemicals, declined was likely to boost imports with tariff process for synthesizing carbon from around 60 percent in 1999 to 45 barriers on styrene coming down by 85 monoxide and hydrogen into liquid percent by 2009, while the share of Asia percent and on polypropylene by two hydrocarbons. Still used today for excluding Japan doubled to 38 percent. thirds. But the country also continued converting gas to liquids. At the same time by the 2008 financial to be a big exporter of chemicals. These crisis the total ethylene capacities of the account for around 5 percent of total HANS TROPSCH Middle East and Asia outside of Japan exports in 2009, the same proportion (1889-1935) were poised to exceed those of the US as in the 1980s. German chemist. and the EU combined. In the rest of Asia, outside of Japan, Responsible, along with the priority for many countries was to Franz Fischer, for the development of SKYROCKETING DEMAND IN speed up the establishment of their the Fischer-Tropsch process that is ASIAN ECONOMIES petrochemical industries both as a being applied in large-scale gas-to- China was one of the fastest expanding means of import substitution and to liquids and coal-to-liquid facilities. producers in line with the rapid growth satisfy growing domestic consumer of its economy whose share of the demand. global GDP increased fivefold between So many petrochemical plants were 1979 and 2010 when it opened up the being built that there was a danger of country to trade and investment. Its overcapacity. But on the other hand ethylene capacity also went up fivefold there was plenty of demand. Even from around 2 million tonnes in the early in the late 1990s the median level of 1990s to over 10 million tonnes by 2007. consumption of plastics products in Asia After, a reorganisation of the country’s was four times lower than the world state-owned petroleum companies China average and of fibres almost half the Petroleum and Chemical Corp (Sinopec) global average. was given the main responsibility for Annual ethylene capacity in the 1990s expanding petrochemicals output. By rose almost fourfold in South Korea to 4.5 2008 Sinopec had 8 million tonnes a year million tonnes while that in Taiwan went of ethylene capacity while PetroChina, up almost three times to 3.4 million. In part of the main NOC China National the ASEAN countries, mainly Thailand, Petroleum Corp (CNPC) had 2 million Malaysia and Singapore, it soared nearly tonnes. fifteenfold to 2.5 million tonnes in 2000. The country nonetheless remained a With Malaysia and Thailand the impetus substantial importer of petrochemicals, was local oil and gas reserves while mainly from the Middle East and to a with Singapore it was the availability lesser extent Europe and North America. of feedstocks from the country’s large Most of the importers tended to be refineries. of a larger size than their domestic competitors. By the early 2000s China
34 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
In Thailand, Thai Olefins Company, part of more than doubled by the 2008 financial state-run Petroleum Authority of Thailand crisis and its immediate aftermath. “The pace of (PTT), built the country’s second cracker Much of the increase in capacity of with a capacity of 385,000 tonnes a ethylene and its derivatives was in Saudi year. This was followed in 1999 by a Arabia which accounted for 60 percent the building of third cracker of 600,000 tonnes a year of the petrochemicals output of the Gulf constructed by the privately owned Arab states. In neighbouring Abu Dhabi petrochemical plants Siam Cement. of the United Arab Emirates (UAE), Malaysia’s move into petrochemicals Borouge, a joint venture between the Abu and infrastructure started with the opening of a polypropylene Dhabi National Oil Company (ADNOC) plant in the south of the country in 1993. and Austria-based Borealis, announced quickened Soon the country’s NOC Petronas became plans for a tripling of its annual polyolefins the main player, backed by Western capacity to 2 million tonnes, including multinationals such as BASF, Dow and a 1.5 million ton-a-year ethane cracker. considerably.” Shell, in a fast expanding sector which In Qatar, a joint venture between Qatar was centred on an integrated oil, gas Petroleum, Total Petrochemicals of France and petrochemical cluster in Kertih and and Chevron Phillips Chemical of the Gebeng in the east. US was planning to build a 1.3 million In Singapore, ExxonMobil started work tonnes-a-year cracker scheduled to come on a steam cracker and an aromatics unit. on stream in 2010. However, Gulf ethane suppliers were The project adjacent to ExxonMobil’s large Despite US sanctions which blocked increasingly coming under pressure refinery in Singapore was to become its access to Western technology, Iran from shortages of ethane in the region ExxonMobil Chemical’s largest integrated had ambitions to more than triple its while having to base more of their petrochemicals complex at the time. petrochemicals output to 100 million petrochemicals on naphtha which had tonnes a year as part of an industrialisation to be costed at world prices. A SURGE OF NEW programme to provide employment for Greater competition in petrochemicals PETROCHEMICALS PLANTS IN its 74 million population. was also introduced into the region by THE MIDDLE EAST In the 2000s so many petrochemical the entry of new players into the In India, Reliance Industries was now plants were being built in the Gulf region sectors. By far the biggest of these emerging as a leading petrochemical that an acute shortage of qualified was Saudi Aramco which aimed to operator with total ethylene capacity engineering and construction exploit the synergies between its of 2 million tonnes a year by 2008. personnel substantially increased refineries and petrochemical production. Work on Reliance’s giant refinery and the cost of projects. In 2005 it announced a partnership petrochemicals complex at Jamnagar, A major attraction for Western with Japan’s Sumitomo Chemical to Gujarat, began in 2005. petrochemical companies investing upgrade an existing refinery at Rabigh The Middle East Gulf continued to be a in the joint ventures behind most of on the country’s west coast into a major growth area for petrochemicals, the ethane-based schemes was the refining and petrochemical complex. helped by a surge in oil prices in the availability of cheap feedstock. The price Then in 2007 Saudi Aramco and Dow 2000s which provided plenty of additional for ethane in Arab Gulf countries was 4-5 Chemical started planning a joint venture revenue to be channelled into increasing times cheaper than the average price of petrochemicals complex adjacent to a production capacity. Its share of ethane for an ethylene cracker in the US. refinery at Ras Tanura on the east coast, world ethylene capacity at the turn of In times of unusually high gas demand which evolved to Sadara Chemical the century of around 7 percent had in the US the difference was far greater. Company (Sadara) in Jubail.
35 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
Another change in the Middle East was Union Carbide — prior to its merger corporate structure of the petrochemical for the private sector to be encouraged to with Dow — building a joint-venture industry had been transformed. This become more involved in petrochemicals. ethylene cracker. Other foreign investors was especially the case in the US and In Saudi Arabia, Saudi Kayan, a joint in petrochemicals in Alberta included Western Europe which had provided the petrochemical project between the Shell and BP. scientific and commercial foundations state-controlled SABIC and private After the collapse of the Communist of the industry in the first half of the investors, was launched with plans trading bloc Soviet Union-led COMECON 20th century. for capacity of 6 million tonnes a year. following the demolition of the Berlin Wall Even in the 1990 ranking of the world’s In Iran the government tried to attract in 1989, followed by the disintegration leading chemical companies most of commercial funds into petrochemicals of the Soviet Union itself, petrochemical the original pioneers of petrochemicals, by privatizing the National Petrochemical production was modernised and expanded made from coal, biomaterials or mineral Company (NPC). with the help of Western investment. In oil or natural gas, were still among eastern Germany, Dow took over Buna the top 10. But by 2007 a significant LIBERALISATION SPARKS which was the largest production site for proportion of them had disappeared, PETROCHEMICALS GROWTH plastics within the German Democratic mainly as a result of being broken up Liberalisation became a major factor Republic (GDR), while Elf Aquitaine later with their parts being acquired by other in the further expansion of petrochemicals acquired an adjacent refinery. A large players. in Latin America led by Pacific coast polyolefin complex was established on Among those that passed into history countries where tariffs were lifted, the basis of a pre-existing petrochemical were ICI, Hoechst, and Union Carbide. particularly after the creation of the plant, at Plock, Poland, by a partnership The latter has been taken over by Dow. Mercosur trading bloc. Argentina and between PKN ORLEN, the country’s ICI and Hoechst were broken up in similar Brazil still have import duties protection leading petrochemicals producer, and circumstances. Under pressure from the for most of the petrochemical products Basell Polyolefins, a Shell/BASF joint financial markets for improvements in manufactured in those countries. In venture, to become LyondellBasell profitability and returns on investment most countries pricing controls were after a merger with Lyondell Chemical in their shares, parts of both companies eliminated (major exception Venezuela). of the US in 2007. were divested or floated on the stock Some governments loosened their grip In the former countries of the so-called market or merged in joint ventures. In 1998 on chemicals production by privatizing “Soviet Block” both production and Hoechst moved its industrial chemicals state-owned producers, which helped to investment in chemicals declined sharply operations, including petrochemical boost foreign investment by leading from 1990 to 1995 when it levelled out activities, to a new subsidiary Celanese, petrochemical multinationals. Dow took but only began to climb back to the which was spun off in an IPO a year over the Bahia Blanca petrochemicals pre-1989 levels in the latter part of the later. Also in 1998, Hoechst and Rhône- complex in Argentina in 1996. next decade. Poulenc of France announced they were In Brazil Petrobras divested most of merging their life sciences operations its stakes in around 40 petrochemical RADICAL RESTRUCTURING AFTER into the Aventis joint venture. In the and derivatives companies to private THE FINANCIAL CRISIS first half of the 1990s ICI sold its nylon companies. The pressures of the new international business to DuPont and spun off its In the industrialised world large new order and high expectations in the financial pharmaceutical, agrochemicals and centres of petrochemical production markets of greater profitability were too speciality activities into an independent were emerging. The petrochemicals much for some major petrochemical company called Zeneca. investment programme of the natural players, some of whom had been leaders gas-producing province of Alberta initiated in the sector since its beginning. By the a new phase, with Nova Chemicals and time of the 2008 financial crisis, the
36 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
The rest of the bulk chemicals operations called Atofina after acquiring Petrofina within the industry. The result was that was sold off in a series of deals, among the of Belgium in 1998 and the other main clusters of producers became even biggest of which was DuPont’s takeover French oil company Elf-Aquitaine. Exxon more prevalent, especially in Europe. of the polyester chemicals business and Mobil considerably strengthened In the US by the 1960s, a large proportion for $3 billion in 1997. ICI disappeared their position in the global petrochemicals of petrochemicals production was taking completely when AkzoNobel acquired its market after they agreed to merge to place in Texas. That increased to around paints operation and remaining speciality ExxonMobil in 1999. 40 to 50 percent by the 1990s. The wider activities in 2007. Even the players from the newly region of the US coast of the Gulf of The main survivors were BASF, Bayer, industrialised countries and emerging Mexico accounted for the vast majority Dow, DuPont and the long-established economies had to reorganise in the face of US petrochemicals production. The US petrochemical players among the of intensive global competition and the Gulf had the infrastructure from the early international oil companies, such as Shell, BP continued surge of excess capacity. days of petrochemicals because most of and ExxonMobil. Most of the newcomers the refineries were built there and it was to the top league were relatively young AGGLOMERATION IN THE OLD the centre of the logistics and distribution but fast growing producers from outside AND NEW HEARTLANDS network. This pattern of petrochemicals the US and Western Europe, indicating The tendency to geographical production has tended to be repeated in how much the balance of power within agglomeration in the industry the locations of petrochemicals production the industry was changing. These included strengthened considerably for the sake of in the developing world. Sinopec of China, SABIC of Saudi Arabia, lowering costs and greater infrastructure Formosa of Taiwan and LG Chemicals of and logistical efficiencies. In the US by SEARCH FOR SECOND- South Korea. 1990, petrochemicals production was GENERATION POLYOLEFINS The exceptions were the Anglo-Swiss already highly concentrated with close Advances in catalysis boosted the Ineos and US Huntsman Corporation to 70 percent of it taking place in Texas number of grades of polymers, for which used debt finance to acquire and much of the rest in neighbouring example, because new catalysts could struggling petrochemical businesses Louisiana. In Europe a super-cluster provide more tailored properties. The to build strong positions in the North was emerging, linking petrochemical biggest advance was the introduction American and European petrochemicals activities in and around Rotterdam of single-site catalysts mainly based on markets. Ineos, founded by the former and Antwerp and Northwest Germany. a combination of metallocene and the equity fund executive Jim Ratcliffe, Among the new petrochemical producers co-catalyst methylaluminoxane. became the world’s biggest privately outside the US and Western Europe, Huge sums were poured into R&D owned petrochemicals producer mainly agglomeration became a more immediate projects. In the 1990s alone over $3.5 through acquisitions of assets from trend. Saudi Arabia congregated its billion was spent on the technical and BP and ICI. new plants in two main centres — Al commercial R&D for second-generation Some of the international oil companies Jubail on its west coast and Yanbu in polyolefin technologies, according to like Shell, BP and Chevron — the latter the east. Singapore started building an estimates. But overall the technology through its joint venture with Phillips, integrated concentration of refineries for the production of mainstream Chevron Phillips Chemical — cut back and petrochemical facilities to make it a petrochemicals using traditional their activities in petrochemicals, in major hub in Southeast Asia. China began processing routes was maturing. the case of BP substantially. Other establishing a large chemicals cluster Catalystsimprovements and innovation oil companies were expanding their in and around Shanghai. were unable to provide significant petrochemical activities. In France, Total, In Europe and to a lesser extent in North increases in yields. the country’s main oil company, created America the departure of the weaker a large petrochemical operation initially producers led to greater agglomeration
37 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
CHEMICAL INDUSTRY HISTORY
In order to gain substantial cost savings Much of the research work was on UOP, with silica aluminium phosphate petrochemical companies had to continue new types of catalysts, many of which catalysts, and Dalian, with aluminosilicate to rely on the ability to build plants of were developed with the aid of new zeolite (ZSM)-type catalysts, separately larger scale as a result of advances in electronic imaging instruments. Advances developed processes to make both engineering. in catalysis boosted the number of ethylene and propylene from methanol. But this became less of a viable option polymer grades because new catalysts In China, this was coupled with the as prices of bulk polymers and other could provide more tailored properties. production of methanol from coal-based base chemicals, mostly petrochemicals, One of the biggest advances was the synthesis gas. This led to the construction dropped across the world because of introduction of single-site catalysts. of many MTO plants, primarily in China. production overcapacity. This overcapacity The most prominent of these were The drive to develop new sources of was due mainly to the growing share metallocene catalysts which differed from feedstock led to the re-emergence of the in the global market being taken by heterogeneous Ziegler-Natta catalysts Fischer-Tropsch process, discovered in producers located in countries with low with many active sites. Metallocene Germany in the 1920s and then used by feedstock and/or labour costs. catalysts were homogeneous with the country during World War II to make Instead some of the R&D likely to a single active polymerisation site gasoline from coal via the production of have the greatest potential was being which gave polymers a lower level of synthesis gas. In South Africa, Sasol, directed at radical changes in the crystallinity, greater clarity and lower the country’s main energy and chemical way petrochemicals were made. These heat-seal temperatures. Catalyst company, installed and continued to involved moving away from ethylene improvements and innovation were develop this technology to make fuels and, in some cases, going back to some unable, however, to provide significant and petrochemicals, including higher of the technologies prevalent before the increases in yields. Instead they were alpha olefins used as co-monomers in start of petrochemical revolution of the targeted at improvements to performance. the production of polyethylene. 1930s and 1940s. These were producing To gain substantial cost savings Shell separately developed its own the equivalent of petrochemicals from petrochemical companies had to continue Fischer-Tropsch-based gas-to-liquids coal, gases and renewables. to rely on the ability to build plants of (GTL) process to make liquid fuels from larger scale as a result of advances in “stranded” natural gas: first in a small WAYS TO DIFFERENTIATE engineering. But this became less of a plant in Bintuli, Malaysia, in 1993. This POLYOLEFIN PRODUCTS viable option as prices of bulk polymers acted like a pilot plant for a giant GTL plant Globalisation boosted total R&D and other base chemicals, mostly in Qatar which Shell opened in 2012. It expenditure on petrochemicals. petrochemicals, dropped across the was an example of chemical engineering This was due to the rapid growth in world because of production overcapacity. at its highest level with thousands of demand for petrochemicals, particularly One factor behind this trend was the catalysts set in numerous looped tubes. polymers, in the emerging economies increased share in global markets being But GTL also offered prospects for and elsewhere in the developing world. taken by producers with low feedstock process intensification because recent Also, producers and state-backed and/or labour costs. innovations with the Fischer-Tropsch research institutes in newly industrialised There were significant advances in technology have demonstrated how it countries were beginning to put money the making of petrochemicals direct can be applied on a micro scale. into petrochemical research. Some from the basic feedstocks. Cooperative Great use of automation applying of the larger research projects were work between UOP of the US and Norsk newly developed sensor technologies aimed at finding ways of fending off Hydro of Norway, with parallel research by in petrochemical plants was raising commoditisation through technologies the Dalian Institute of Chemical Physics production efficiencies but also helping to which differentiate products within the in China, led to the development of deal with shortages of skilled workers, same polymer class. methanol-to-olefins (MTO) technologies. particularly operators.
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CHEMICAL INDUSTRY HISTORY
A NEW LEVEL OF CHEMICALS the substances they were marketing At the same time increasing numbers of REGULATION were safe for humans, animals and the national associations were now signing As a result of the passing of the Single environment. up to the rules of Responsible Care. European Act, which set the European Cefic and other groups representing The petrochemical industry was seen Community an objective of establishing the chemical industry contributed their to be serious about environmental a single market by the end of 1992, expertise and knowledge to six working protection. harmonisation of environmental standards parties set up by the Commission on the became an EU responsibility. One of areas of the new legislation. the first initiatives of the European Commission was to introduce in the GLOBAL WARMING early 1990s environmental controls Usually environmental and safety policy on chemicals on the basis of the risk is concentrated on human health and air, assessment of chemical substances. water and land pollution. In the 1990s In the US the Chemical Manufacturers’ a new element was introduced with Association (CMA), now the American concerns about global warming. The Chemistry Council (ACC), teamed up priority with governments became the with the Environmental Protection use of regulations and other initiatives to
Agency (EPA) to launch in 1998 a testing cut CO2 emissions, particularly in energy programme for individual high production intensive industries like petrochemicals. volume (HPV) chemicals, most of them The EU was a signatory to the 1997 Kyoto petrochemicals. Protocol to the UN Framework Convention This initiative was an example of how for Climate Change (UNFCCC) such much relations between regulators and that it became committed to meeting industry had improved since the surge legally-binding targets for reductions of of regulations targeting chemicals in greenhouse gas (GHG) emissions. The the previous two decades. EU pledged to cut GHG emission levels In the late 1990s the European by 20 percent by 2020. It decided to Commission, the EU’s Brussels-based introduce the first international emissions executive, started to work on what was trading system (ETS) to cover power and to be the largest piece of legislation ever energy-intensive units like petrochemicals- on the chemicals sector. It was called producing plants. Emission allowances REACH for the Registration, Evaluation and would be allocated to the plants. Owners Authorisation of around 30,000 Chemicals of plants emitting more than permitted with an annual output of 1 tonne or emissions would have to buy allowances more. It was finally approved in 2007 to cover the excess or otherwise face with petrochemicals being one of the the payment of heavy fines. The scheme first industries to have to provide safety was started as a three-year pilot scheme dossiers on all its high volume products. in 2007. The legislation which was issued in the The industry indicated that it supported the form of a regulation so that it would be objectives behind some key regulations. directly applicable in the different member In particular it wanted to help in the fight states, required chemical producers and against climate change. distributors to provide evidence that
39 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
LOGISTICS & SUPPLY CHAIN HISTORY
SUPPLY CHAINS ARE ports like Rotterdam and Antwerp operated BEING GLOBALISED hub systems with some hubs linking road, rail and waterways being located within “By 2008, the As petrochemical producers expanded their hinterland transport systems. The across the world, their logistics service challenges LSPs were facing at the end corporate structure providers had to do the same. Furthermore of the 20th century also led to further the producers were outsourcing even consolidation activities in the sector. In of the petro-chemical more logistical services, especially in areas 1999, Rotterdam-based Royal Vopak, where the transportation, storage and was created by the merger of Dutch industry had been distribution became highly specialised. logistics companies Van Ommeren Leading logistics service providers and Pakhoed, building on a history of transformed. ” (LSPs) had to offer integrated solutions. almost 400 years. That was the start These included international networks of a substantial expansion program of intermodal transport, with tank in independent storage to serve the storage units, warehouse facilities, globalisation in the industry. freight forwarding services and some forms of supply chain management. THE INFORMATION TECHNOLOGY Often these services were provided REVOLUTION in emerging economies through joint Logistics companies expanded into being for example, was considerably improved ventures and alliances. The higher the supply chain specialists, coordinating a by electronic monitoring. Sensors or complexity of the supply chain due to series of distribution networks based scanners could measure the levels of sub-standard infrastructure the more on well-established relationships and products in a customer’s storage tank important local partnerships were in partnerships. The radical changes in with the information being transmitted preventing disruptions. communication and data flows as a result back to the supplier to ensure stocks As containerisation became more of new IT technologies, particularly would be replenished at the right time. sophisticated and reliable, increasing those that brought in the internet and These monitoring systems could be numbers of petrochemical producers data processing and storage, made linked with the software controlling and their customers were wanting to integration of logistics much easier computerised manufacturing planning transport chemical products in containers. than in previous years.Fifty years ago tools (MRP) which helped schedule This helped to streamline key stages customers telephoned orders which the volume and range of outputs in within the chain. While in North America were processed through locally devised production plants. MRP had been slow a high proportion of bulk chemicals systems. Shipping documents were to penetrate the chemical industry until were transported by rail, in Europe put together manually. Only critical it was extended to enterprise resource it was the reverse with most loads information was faxed. Now emails planning (ERP) in the 1990s to cover not being distributed by road. But with and the internet enable information to just manufacturing planning but all the increasing opportunities for intermodal be transmitted instantaneously while departments of a company as well as distribution with standardised tankers, data is processed and analysed rapidly its customers and suppliers. a growing proportion of transportation by computer. IT also allowed activities Among the software specialists creating was done by combinations of road, along the logistics chain to be monitored ERP packages, SAP of Germany was the rail and barges. electronically with the data being sent most successful in the chemicals sector The creation of large-scale bulk terminals back to the computers of shippers and because it ensured its programmes across the world helped increase the transportation companies. The efficiency of covered requirements unique to the efficiency of local distribution. In Europe Vendor Managed Inventory (VMI) systems, chemical industry.
40 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
LOGISTICS & SUPPLY CHAIN HISTORY
These included regulatory and two thirds to 60. Three years later it environmental compliance but also aspects was taken over by Intercontinental “Logistics companies typical of a chemicals logistical chain. Exchange (ICE), an Atlanta-based ERP opened the way for the chemicals futures exchange. Although most of sector to make much greater use of the chemicals exchanges founded at expanded into IT. By the late 1990s the vast majority the time of the e-commerce craze of the largest chemical companies, were failures, a few were successful being supply chain including leading petrochemical producers, in developing IT infrastructures for the were using SAP’s latest ERP software. selling, marketing and distribution of specialists.” One major effect of ERP was that it chemicals and providing a platform for enabled petrochemical and other chemical IT-based supply chain management. producers to participate in the surge in One of these was Elemica, which was set e-commerce from the late 1990s to the up by a consortium of leading chemical early 2000s, after which its popularity companies such as BASF and Dow. It as a means of doing business started went on to become a leading provider to wane rapidly. of supply chain integration systems.
THE E-COMMERCE BOOM AND INVESTING IN SAFETY AND WHAT’S LEFT OF IT ENVIRONMENTAL PROTECTION E-commerce was seen by its pioneers The arrival of the internet compelled as being an ideal solution for the chemical companies to invest more in commodities-dominated chemicals IT, especially to improve the efficiency industry by offering a means of buying of logistical operations. Another factor and selling of products online, particularly pushing up investment was the increasing on the spot market. It would speed up toughness of regulations on safety and considerably the process of finding and environmental protection. then doing deals online with potential In shipping one of the most expensive were a number of other initiatives in the buyers or sellers. Entrepreneurs rushed new rules was the requirement that chemicals sector to draw up voluntary into the rapidly expanding sector so that chemical and other tankers be fitted codes and processes for improving safety by 2000 there were 45 e-commerce with double hulls to lessen the and environmental protection. Europe exchanges. Among the biggest and environmental damage from accidents had the Safety and Quality Assessment the first into the market was the San at sea. The obligation which was part System (SQAS) for evaluating the quality, Francisco-based ChemConnect, which of the International Convention for safety, security and environmental was founded in 1995 and raised over the Prevention of Pollution from Ships performance of logistics providers and $100 million from investors, including (MARPOL) drawn up by IMO, applied distributors. chemical companies. Its exchange had to new tankers of 5,000 deadweight The issue of global warming also a volume of close to $9 billion in 2002. tonnes or more from July, 1993 and to began to gain greater prominence However, e-commerce volumes soon existing tankers from 2007. in logistics. An impetus behind the began to quickly subside as chemical Health, Safety, Security & Environment growing popularity of tank containers companies and traders realised it was (HSSE) standards were being introduced was their ability to increase efficiencies just one way of doing business, not on a wider scale in the tanker sectors and also to reduce energy consumption necessarily the most efficient. By 2004 but also along the logistics chains in along the logistics chain and hence
ChemConnect‘s staff had fallen by storage and pipeline systems. There CO2 emissions.
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EPCA HISTORY
1993 to June 2002, governance principles Cefic in 1998 under the chairmanship were introduced in the EPCA structures, of Phil Browitt, ex ICI, founder of completing what was provided for in the Agility Logistics. In the field of marine EPCA Articles of Association and bye- logistics, the Chemical Distribution laws. Under Kruit’s EPCA Presidency Institute (CDI) was created. It provides from 1995 to 1997 an EPCA Mission inspection systems for marine and Statement was introduced and indicated terminal operations. that EPCA was to provide to its members In its move to open EPCA to the Eastern an efficient means of communication of European market, in 1992, a first seminar THE TURN OF THE matters of interest and relevance within in Budapest was organised on the CENTURY and to promote activities of potential logistics challenges facing Eastern benefit to the petrochemical industry Europe. CALLING IT A MILLENNIUM in Europe. 1990 TO 1998 In this period, the General Committee also DEVELOPING THINK TANK During the period of globalisation and established the EPCA Strategy by which CAPABILITIES IN LOGISTICS increasing legislative as well as general EPCA’s main function was to organize Think tank capabilities were undertaken public environmental pressure in the an Annual and a Logistics Meeting for the first time during the 1995 EPCA 1990s, EPCA reflected on how to adapt each year as well as seminars on specific Distribution meeting when a “strategy its own role to the ongoing globalisation topics. Also, the excellent relationship breakfast” was organised amongst of its member companies and on its developed with other associations like selected EPCA delegates serving as relationship with other regions and NPRA and APLA should be continued a think tank for generating new associations. and a relationship with Asia should ideas. Further development came EPCA’s Director, Eric Yates, supported in be examined to encourage regional via the organisation of a formal EPCA his efforts by the General and Distribution meetings. Finally, EPCA was to continue Logistics Think Tank. The first one was Committees put EPCA meetings at the to develop ideas that were in the interest held in 1996 in Limelette, Belgium. The forefront as “the place to see and be of the industry. need for standardisation of equipment seen” by industry peers and the “who’s What was in particular addressed in between service provider companies and who” in petrochemicals for newcomers, the EPCA Strategy were the many producers’ loading/unloading facilities suppliers as well as customers of the logistics projects in which EPCA got was highlighted, as was night driving petrochemical industry. Under his involved, following up on discussions for hauliers to reduce traffic congestion guidance EPCA meetings became with delegates at the EPCA Distribution during the day and avoiding return trips a “must attend” for people active in meetings that changed name in 1996 of trucks running empty after unloading. the petrochemical industry in Europe into Logistics Meeting. For instance, in and even from non European countries. the field of European land logistics, one THE BIRTH OF THE EUROPEAN One had to be “invited” to join EPCA of the most important projects developed CHEMICAL TRANSPORT meetings for which strict limitation rules during this period was the International ASSOCIATION (ECTA) on segregation per activity segment Chemical Environment (ICE) program The 25th anniversary of the EPCA Logistics were applied. Yates also was very active aimed at reducing health, safety and Meeting in Barcelona in 1997 was at the in the logistics field trying to develop environmental risks in the supply chain. origin of the creation of the European measures that would improve health The steering group chairman was Eric Chemical Road Transportation Association & safety. Yates. The Cefic Board approved the ICE (ECRTA) in 1998, which had its inaugural Under the guidance of Jan Hessel Kruit, program in 1992 and the management meeting in Amsterdam a year later. who joined the General Committee from of ICE was transferred from EPCA to
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EPCA HISTORY
During this inaugural meeting the name the organisation, and a set of written EPCA also decided to keep the meeting of the association was changed to the policies were decided upon. going in the aftermath of the September European Chemical Transport Association 11, 2001 terrorist attacks in the US. (ECTA). This name change marks the OPTIMIZING RESOURCES AND 1,100 delegates from all over the world inclusion of rail, short sea shipping, COMMUNICATION gathered together in Monaco with 11 inland terminals and barges in the land The relationship with Cefic, APPE (now persons coming from New York City. logistics segments covered by the Petrochemicals Europe) and APME Notwithstanding the sad and difficult ECTA scope as a representative body (now PlasticsEurope) was clarified in circumstances of September 11, the fact of land chemical transport companies the sense that EPCA is defined as a that EPCA went on with its meeting had and platform for meetings between network bringing companies together a positive impact on the development producers and service provider companies from all over the world, regardless of the of building trust and reliability in EPCA’s on European land logistics issues. fact that they are producers, suppliers contractual relationships with the hotels The development of contacts with other or customers of the petrochemical and local authorities. associations in the logistics field like industry. It was also made explicit that, Marichem, ITCO, INTERTANKO, and contrary to the aforesaid lobby bodies for COMMUNICATION CCIA was debated frequently between European chemical producers, advocacy IMPROVEMENT: REPORT 1996 and 1998. is excluded from EPCA’s activity field — BRAND — EMBRACE and that EPCA does not represent its DEVELOPMENT member companies. From 1999 on, all activities undertaken BIG SHOES TO FILL To avoid overlap and optimize resources by EPCA resulted in a written report 1999 TO 2008 and communication in an informal way shared in the EPCA network and with between Cefic, Petrochemicals Europe external stakeholders. Quite often the THE CHANGING OF THE GUARD and PlasticsEurope several members conclusions of such a report served as a IN 1998 of the EPCA Board and Supply Chain source of inspiration for the organisation In September 1998 a new Director, Cathy Program Committee are active with of further EPCA activities deepening Demeestere, was appointed to succeed the Board or the SIG Logistics of Cefic topics which the Board agreed to be to Eric Yates who retired in November and with the Board of Petrochemicals important for the industry or the EPCA 1998 and tragically passed away only Europe or PlasticsEurope. organisation. three months after his retirement. Eric A new EPCA website became operational Yates left an impressive heritage and “big INCREASING THE UNIQUENESS in mid-1999. In 2000 EPCA adopted a shoes to fill”. Such was the challenge OF EPCA MEETINGS new logo reflecting its openness to the put to the new Director. The strategy was developed to increase outside world and new ideas and started the “uniqueness” of EPCA meetings and to develop a fresh corporate identity to GOVERNANCE differentiate EPCA from other meeting make it more attractive to the public and Through a series of changes to the Articles organizers in the chemical segment, youngsters as well as to align it with its of Association, the organisation was via limiting access to EPCA members. mission statement. modernised and aligned with changed In 2001, for the 35th Annual Meeting in legal requirements and governance Monaco themed “Concentration: Fashion best practices. The objective of the or Necessity”, the host country approach association was clearly defined, was abandoned and an “all in one” inclusive of the obligation to build up approach was adapted for content, form, reserves to safeguard the perpetuity of entertainment, visuals, and decoration aligned with the main theme.
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EPCA HISTORY
From 1999 on, EPCA Annual and Logistics becoming an increasingly integral part 2003. These seminars brought together Meetings as well as seminars, working of the petrochemical business and we delegates from Eastern and Western groups, workshops and think tanks were also think it is important that service Europe from producing and service given a specific theme to allow topics of providers and chemical business people provider companies with the participation relevance to the industry to be debated be able to meet and discuss common of the European Commission to discuss on the EPCA platform from different topics’. the impact of the EU enlargement angles and allow transfer of learning on logistics in Eastern Europe as well from leaders in other industry segments ECTA IMPLEMENTATION as to promote the best practices of ICE or from recognized opinion leaders or Intensive efforts were dedicated to and Responsible Care. The need for experts with global reach. The aim was drafting the ECTA Articles of Association more implementation of principles and to confront vested opinions from inside and obtain approval from the Belgian guidelines developed in this connection and outside the industry and challenge authorities by Royal Decree in 1999, whilst were frequently underscored. ‘business-as-usual’ approaches, making reports were issued on standardisation the audience aware and supporting them of equipment and standard performance SCHOLARSHIPS: SUPPORT, to get ready for the changes occurring measurement that were endorsed by APPRECIATION AND around them. the Cefic/EPCA/ECTA working groups ENCOURAGEMENT on best practices. In 2000 EPCA and the Heriot Watt COOPERATION WITH OTHER The number of working groups increased University in Edinburgh, Scotland, GEOGRAPHICAL AREAS steadily in good cooperation between selected an EPCA sponsored scholar CONTINUES ECTA and Cefic whereas EPCA acted as in the scope of his Masters in Logistics To bridge the gap of a lack of industry- a neutral platform as well as a manager and Supply Chain Management. driven meetings in Asia, EPCA supported and facilitator/sponsor of ECTA. Being offered a job by BP whom such a local Asia meeting inspired by Milestones for ECTA were the signing he interviewed as EPCA member the NPRA, APLA and EPCA practice of the European Road Safety Charter in company for the writing of his thesis, in 1999. The Gulf Petrochemical 2005 in the presence of the European this scholarship met many objectives: Association (GPCA) was created in Commission and the signing of the make EPCA and the chemical industry 2006, and represented the downstream agreement with Cefic in October 2008 as known and appreciated in universities, hydrocarbons industry in the Arabian the first transport association to launch a encourage scholars to work for the Gulf. A lot of support was given by pan-European Responsible Care program chemical industry and in logistics, and EPCA to GPCA in the early days. in Europe. Having gained recognition support member companies in their and acceptance of its advocacy role, efforts to attract young talents. EPCA RINGING IN THE CHANGES ECTA became independent from EPCA has continued these efforts ever since At its 40th Anniversary Annual Meeting, at the end of 2010. in its educational projects. which took place in Monaco in 2006, In 2002 EPCA funded a thesis by a group EPCA introduced a major initiative: EASTERN EUROPEAN SEMINARS of students, dedicated to “Bulk Chemical holding again joint meetings of the ON EU ENLARGEMENT IMPACT Supply Chains: Moving Feedstock to general business and the supply chain To promote the implementation of Flow” in collaboration with the Technical sectors that were split from 1974 up to Responsible Care out of the factory University Eindhoven, The Netherlands and inclusive of 2005. EPCA registered an gate into the supply chain, EPCA, in and Stanford University, USA. In 2006, all-time record attendance of more than cooperation with Cefic and ECTA as EPCA sponsored the thesis of an MSc in 2000 delegates. Then-EPCA President well as with local industry and transport Logistics and Supply Chain Management Boy Litjens stated, ‘the main reason for associations, organised three European at Cranfield University offering a well- holding a joint meeting is that logistics Logistics and Transport seminars in Prague documented case study on Vertical and supply chain management are in 1999, Krakow in 2001 and Budapest in Collaboration.
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EPCA HISTORY
DEVELOPING THINK TANK The third EPCA report was drafted by a respective organizations for cooperation CAPABILITIES IN LOGISTICS & IN team of researchers at the international on EPCA education and communication CHALLENGING “BUSINESS AS INSEAD Business School created in 1957 projects. It can also suggest to the USUAL” in Fontainebleau, France. It was themed Board new projects which could be of In the period 2004 to 2009 three think “A Paradigm Shift: Supply Chain interest to the industry and are different tank exercises took place, resulting in Collaboration and Competition in and from the ones EPCA is already involved the production of reports that have between Europe’s Chemical Clusters” in. The YETT has had regular meetings been shared with the delegates in and summarized the conclusions of since 2004 and has since its creation the Logistics Meetings of 2004, 2005 two think tanks. contributed substantially to the debate on and 2007 and distributed in the EPCA One was dedicated to the Antwerp/ EPCA’s strategic focus, communication network and in other conferences. Rotterdam/Rhine-Ruhr cluster, spread and adapting EPCA’s meetings to the The first of three reports called “Supply over The Netherlands, Belgium and changing needs and expectations Chain Excellence in the European Germany, and another one was examining of EPCA delegates. Chemical Industry” was a joint EPCA the Tarragona cluster in Spain. and Cefic initiative dedicated to the Four recommendations were made LEARNING FROM BUSINESS competitive threats the European for companies acting in clusters in SESSIONS petrochemical industry was facing order to get more value out of the Since 2000, EPCA has put at the forefront from the Middle East and Asia, whilst cluster. The report indicated that the of the business session programs of its being confronted with higher chemical paradigm shift on collaboration had Annual and Logistics Meetings a theme transport costs in Europe. The think anything but taken place. However, showing how the chemical industry tank identified a series of measures this cluster report was taken on board contributed to sustainable development in that could transform European chemical upon its publication by the High Level one or the other aspect of sustainability. supply chains. Group on the competitiveness of the Sustainable development and corporate The vast majority of these measures chemical industry in the European social responsibility as a whole were would require inter-company collaboration, Union that was organized in June 2007 addressed in the meetings of 2000 and a real mindset shift. The chemical industry by the European Commission with the 2002, whilst in 2005 EPCA promoted and was indeed seen to lag rather than lead participation of industry leaders. demonstrated that chemical products the development and implementation of Each of these publications constitutes improve our daily life and human well-being. new logistics practices and tendencies. an interesting source of learning one can The economic dimension of sustainability The report concluded with a call for still draw from that was generated by was challenged in 2001 by examining the action to adopt, for example, swap the efforts of EPCA member company competitive advantage of concentrations arrangements, shift from packaged to representatives, top level academics in the chemical industry and in 2003 by bulk distribution and transfer traffic from and EPCA. looking at the global competitiveness of road to rail and waterways. the European chemical industry. A second EPCA/Cefic think tank YOUNG EPCA THINK TANK (YETT) resulted in a report published in 2005 In 2002, the Young EPCA Think Tank called “Maximising Performance (YETT) was established as an advisory Management: the Power of Supply body that is to regularly challenge EPCA’s Chain Collaboration” and proposed mission and strategic development, benefit forecasts that could be realised assist in the selection of themes for if the proposed measures were the Annual Meeting, support EPCA’s implemented. education and communication efforts and act as ambassador of EPCA in their
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EPCA HISTORY
In 2004, the focus was laid on the human In 2008 François Cornélis, then President aspect of sustainability by promoting of Cefic and Vice-Chairman of the how the chemical industry recognises Executive Committee of Total, expressed the value of people and the need to the belief of continued dominance of constantly develop them, and in 2007 fossil fuels in giving access to carbon EPCA showed that the industry takes as a building block for the chemical advantage of the diversity in the workforce industry, as well as the fact that the and of the different, complementary chemical industry is at the centre of skills of the people employed by the all industries and an important source many international companies that form of innovation. part of its membership. In 2008, Kofi Annan, United Nations Secretary General from 1997 to 2006, underscored the geopolitical impact of climate change as well as the lack of leadership and of poverty inclusion. Energy and hydrocarbons were at the heart of the debate in 2006 and 2008, with attention focused on hydrocarbons as building blocks for the chemical industry.
46 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 4 — Globalisation Transforms the Industry - 1990 to 2009
EPCA HISTORY
EPCA PRESIDENTS EPCA VICE- 1997 - 1998 EPCA TREASURERS DR. W.D. CRUYT PRESIDENTS PETROFINA 1989 - 1990 1989 - 1990 Belgium 1990 - 1992
H. BJØNTEGÅRD DR. G. PORTA 1998 - 2000 C. BOSMAN DYNO INDUSTRIER MONTEDISON J.-P. VETTIER CHEMGAS Norway Italy TOTALFINA The Netherlands France 1990 - 1995 1990 - 1991 1992 - 1997 DR. G. PORTA D. KEMPERMANN 2000 - 2003 M. GISIGER ENI CONDEA CHEMIE DR. W. THÜNKER SGS Italy Germany VEBA OEL Switzerland Germany 1995 - 1997 1991 - 1992 1997 - 2004 J.H. KRUIT F.A.G. COLLOT 2003 - 2008 O. TANGERAAS DSM HYDROCARBONS D’ESCURY T. WALTHIE ODFJELL The Netherlands AKZO CHEMICALS THE DOW CHEMICAL CO. Norway The Netherlands Switzerland 1997 - 1998 2004 - 2008 DR. R.B.WALKER 1992 - 1993 J.A. HAMMER ICI CHEMICALS & POLYMERS DR. F. WEHMEIER ODFJELL United Kingdom VEBA OEL Norway Germany 1998 - 2000 DR. W.D. CRUYT 1992 - 1995 PETROFINA B. WILTZ Belgium ELF ATOCHEM France 2000 - 2003 R. WILLEMS 1993 - 1995 SHELL CHEMICALS J.H. KRUIT United Kingdom DSM HYDROCARBONS The Netherlands 2003 - 2006 DR. W. THÜNKER 1995 - 1997 DEUTSCHE BP/BP REFINING & DR. R.B. WALKER PETROCHEMICALS ICI CHEMICALS & POLYMERS Germany United Kingdom
2006 - 2008 B. LITJENS SABIC EUROPE The Netherlands
47 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY CHAPTER 5 RECOVERY FROM RECESSION AND CONTINUED GLOBAL EXPANSION 2009 TO PRESENT
48 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 5 — Recovery from Recession and Continued Global Expansion - 2009 to Present
CHEMICAL INDUSTRY HISTORY
MARKET SHAKE-UPS per barrel triggered a sudden drop in In the Middle East Gulf, Saudi Arabia AND A CHANGING announcements of petrochemicals continued with its plans for more INDUSTRY projects in the pre-planning phase, petrochemicals capacity. But like its indicating there could be a lull in new fellow member states in the GCC, such LANDSCAPE capacity in the early 2020s. as the United Arab Emirates (UAE), The developed world, particularly in Europe, Nonetheless the curbs on investment Oman and Kuwait, a new priority was was the worst affected by the 2008 looked likely to be temporary with the diversification to reduce dependence financial crash. Petrochemicals production petrochemical sector returning to its on oil revenues. The idea was that the dived in Western Europe. By 2015 it had relentless growth in capacity once GCC economies would consist more of still not recovered to its pre-2008 levels. there were fewer doubts about the manufacturing plants using petrochemical But output recovered relatively quickly in future direction of oil prices. derivatives. A lower proportion of the the emerging economies, especially in In the early 2010s, the development of GCC petrochemicals output would go China where the government introduced the US shale gas and shale oil boom into export markets, mainly of Asia, and a number of measures to stimulate the due to the successful combination of more into local embryo industries like economy. While demand fell in Europe, the technologies of horizontal drilling the making of electrical and electronic North America and Japan, it continued and hydraulic fracking has triggered appliances, automobiles and car parts to surge ahead strongly elsewhere. one of the biggest seismic shifts in and healthcare products and equipment. Europe’s share of the global chemicals the whole history of the petrochemical Neighbouring Iran, however, which market shrank further. industry. Not only has it rejuvenated US is not a GCC member, had in 2015 However, worldwide investment in petrochemicals but it has also changed embarked on a massive programme petrochemical capacity was buoyant. In the whole balance of competitiveness of petrochemical expansion after the 2015 global investment in petrochemi- in the global petrochemicals market. lifting of sanctions. Iran’s state-owned cal projects in the planning through to National Petrochemical Company (NPC) construction stages was estimated to CHINA, INDIA PRESS AHEAD WITH announced plans to more than double total around $500 billion, well above PETROCHEMICAL EXPANSIONS petrochemicals capacity to 138 million the historical average. The global pet- The big drivers of expansion in the sector tonnes a year by 2020 and to 180 million rochemical industry was confident that remained the two major engines of tonnes by 2025. demand for its products in high growth demand growth in Asia – China and regions like Asia would remain high as India — with much of the supplies to EUROPEAN PETROCHEMICALS a result of relatively strong growth in meet demand coming from petrochemical COME UNDER NEW PRESSURE GDP and a steady increase in the living imports. Even when China suffered The 2008 financial crisis left the European standards of hundreds of thousands, the slowdown in GDP in early 2016 it chemicals sector suffering an even greater possibly billions, of people. dipped just below an annual rate of 7 loss in its share of the global chemicals A dramatic drop in crude oil prices percent while the economy of India market, particularly that of petrochemicals. which started in mid-2014 leading to was increasing by just over 7 percent. Despite a recovery in sales, Europe’s prices below $40 per barrel by early China was pursuing ambitious plans share of global chemicals production by 2016 helped to boost demand because for an almost doubling of ethylene value had fallen to just under 17 percent in of cheaper petrochemical prices. This capacity to 33 million tonnes a year 2013, compared with 32 percent in 1993. was mainly due to a 30 percent drop by 2020 rising to 50 million tonnes By 2030 the share was projected to go in a year in feedstock costs. However, by 2025. India also aimed to invest down further to 12 percent, according uncertainties about the future level of heavily in new petrochemical plants to a study by Cefic. oil prices, especially fears that they with some of the feedstock possibly might return to the highs of over $100 from gasification of coal.
49 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 5 — Recovery from Recession and Continued Global Expansion - 2009 to Present
CHEMICAL INDUSTRY HISTORY
EU chemical producers were even petrochemicals producing centres of losing business to importers with its North-Rhine-Westphalia in Germany “New rising stars share of the domestic market going accounted for around 40 percent of down from almost 87 percent in 2003 Europe’s petrochemicals production. to 81 percent in 2013. Europe’s clusters provided a platform for were taking their place The restructuring of the European distribution and marketing networks in petrochemical industry continued the region which brought petrochemical among the leaders with more long-established players producers into closer relationship with withdrawing from the sector. In 2011, their customers than most other areas of a thriving global Belgian chemical company Solvay acquired of the world. French competitor Rhodia (the chemicals, petrochemical sector.” fibers and polymers activities spun off US JOINS THE RANKS OF THE from Rhône-Poulenc in 1998). Bayer in MAJOR PETROCHEMICALS 2015 moved to spin off the last of its EXPORTERS petrochemical-based businesses into a The boom in the production of US new independent company Covestro. In shale oil and gas triggered a remarkable main rivals would be petrochemicals late 2015, DuPont and Dow announced revival of the country’s petrochemical exporters from the Middle East Gulf. plans to merge their operations, and sector. It went through a period in the Their products would also be derived subsequently spin into three independent early 2000s during which the country’s from ethane, but they would have little, companies creating industry leaders trade surplus virtually disappeared. But if any, cost advantage over the US in agriculture, material sciences and it was faced with the prospect of an products. specialty products. With that, BASF is enormous trade surplus by the 2030s In Europe, the first petrochemicals the only company from the petrochemical mostly stemming from the potential for manufacturers that have planned to industry’s early days to remain a leading a big rise in exports of bulk polymers import ethane from the US have been operator in the sector today. and other petrochemicals. Ineos, Borealis and Shell, while Reliance However, there were plenty of rising In 2015 around 20 companies, many of Industries in India is also planning to stars outside Europe and North America them foreign, were planning to build new become an importer of US ethane. already taking their place among the or expanded ethylene crackers based The US and Middle East exporters would leaders of a thriving global petrochemical on low-cost shale ethane which would be confronting not only competition sector. These included SABIC, Sinopec, increase US capacity by two thirds in from domestic chemical producers Braskem and Reliance. 2020 when they were scheduled to but also a relatively new phenomenon BASF’s continued prominence in come on stream. Even if only half of of government policies aimed at the sector was built on integration the projects went ahead, a considerable making their countries self-sufficient — in production and in know-how. proportion of the additional output — in petrochemicals. Ironically, this would This integration was also the major perhaps as much as 10 million tonnes be a similar tendency to what prevailed strength of the European chemical a year in ethylene derivatives — would in Europe in the 1950s and to a lesser industry as a whole, particularly with be exported to Asia, Latin America and extent 1960s with governments anxious petrochemicals, the production becoming Europe. to help their domestic petrochemicals even more deeply embedded into a The major market would be Asia producers gain the most benefits out series of clusters across Europe. The where they would compete with the of rapidly growing consumer demand. biggest of these were in the ports and region’s naphtha-based crackers with China has been the most notable hinterlands of Rotterdam and Antwerp. a considerable advantage in feedstock in Asia to be supporting moves to In fact these two clusters linked to the costs. However in these markets their self-sufficiency.
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CHEMICAL INDUSTRY HISTORY
Others include Indonesia while Malaysia One option is being moved forward by is aiming to considerably reduce its inflow SABIC in Saudi Arabia with plans for a of petrochemical imports. India has a $30 billion oil-to-chemicals (OTC) scheme long-term objective of self-sufficiency in Yanbu due to come on stream in late but analysts reckon this is unlikely to be 2020. It would use technology for the achieved until well beyond the 2020s. direct production of chemicals from crude oil without the necessity for the MORE DIRECT ROUTES FROM traditional processing in refinery units. FEEDSTOCKS TO PETROCHEMICALS One advantage of these technologies Many of the new areas of R&D in for emerging economies, particularly petrochemicals were now focused large ones like China and India, is that on the development of innovative it helps them be more technologically processes which shorten the routes independent without having to buy process between feedstocks and the final licenses and engineering expertise from petrochemical products. These include Western companies. further refinements to GTL, coal to olefins (CTO), methanol to olefins (MTO) and propane dehydration (PDH). But just how successful development work in these areas is will depend on the future level of oil prices. The production of petrochemicals from coal — which is an important part of the future industrialisation strategies of China and India — will benefit from a high oil price. Also, the production of derivatives from oil could depend on progress with carbon capture and sequestration (CCS) technologies.
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LOGISTICS & SUPPLY CHAIN HISTORY
LOGISTICS has to be offset against its financial ADJUSTING TO NEW RESHAPED TO SERVE price-related benefits. INTERNATIONAL SUPPLY NEW TRADING At the same time production and inventory PATTERNS level planning has been made more Logistics service providers have had to NETWORKS difficult by sharp contrasts in growth adjust to new patterns of international The big challenge in logistics and rates in demand between the world’s supplies, particularly between Europe supply chain management has been mature markets and the faster expanding and Asia and to a lesser extent with the to find ways of reducing costs with emerging markets. Demand forecasting Middle East. More radical changes will a choice of a wide range of IT tools has become more complicated. be necessary once the US establishes while ensuring that supply chains do Other issues include the extension of IT itself as a major petrochemicals exporter. not become too complex. One major activities from ERP systems to more web- In the Middle East the petrochemical difficulty is matching supply systems based operations, like greater use of cloud clusters have been getting even bigger. based on bulk products to a growing facilities, and the extension of outsourcing But at the same time there has been a trend downstream for a need for flexible to the handling of documentation. massive programme in building new production processes which can switch Supply-chain-management (SCM) roads and rail systems so that there is quickly between different grades with specialists are expanding their activities more transportation of products between minimal downtimes. This is particularly to cover procurement, order capture and clusters. Also, as a result of economic happening among packaging converters, fulfilment, transportation, invoicing and diversification more petrochemicals who have to respond to demands from payment, vendor inventory management need to be distributed to relatively retail chains for frequent changes in (VIM), and terminals flow monitoring. The small downstream manufacturers. In packaging design in line with their in- result is an opportunity for producers to China there have also been big efforts store marketing activities. have the advantages of more integrated to improve its transport infrastructure. Also, online supply chain-tracking systems supply chains. Globally the ports themselves have are generating large amounts of data Data management has become a key been developing international alliances which put pressure on petrochemical element of these outsourced services. It which are forming the basis for global companies to speed up logistics and can provide opportunities to expand sales networks with the larger ports acting to reduce lead times for fulfilment of from existing customers and to find new as hubs for other smaller ports and for orders. This is often not easy in a sector ones. Automation of as many processes inland logistics centres. with large production plants. Production as possible along the supply chain has Changes in trading patterns have lead times after the 2008 financial crisis become an important objective. And not just been confined to petrochemical lengthened, particularly in Europe, as then there is the challenge of integrating products but have been embracing a result of closures of plants which them all in a single system and, with feedstocks as well. Ineos has been left scarcities in the supplies of some data, a single source of information. investing over $2 billion in a scheme chemicals, making procurement more Non-IT issues include the rapid rise in the to import low-cost US shale ethane complicated. growth of tank containers, particularly in to terminals in Scotland serving two Balancing inventory efficiency and China, now the world centre of container ethane-based crackers at Grangemouth the need to reduce costs has become a manufacturing. Responsible Care is and nearby Mosmorran and another problem during a time of falling oil prices adopted more widely in chemical one in Rafnes, Norway. and with it fluctuating petrochemical logistics. Levels of CO2 emissions in More changes are expected with regard prices. Often it has become necessary to logistics chains become an even bigger to feedstock supply chains. This will also hold back stock in order to take advantage challenge so that chains are beginning lead to increasing volatility. Petrochemical of price changes. Thus, the extra cost to compete on the basis of their carbon supply chains will have to be capable involved in increasing the inventory times footprints. to deal with this situation.
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EPCA HISTORY
THE FINANCIAL business case for diversity inclusion ENERGY, HYDROCARBONS, CRISIS AND ITS in the chemical business community. RENEWABLES AND THE AFTERMATH Diversity is defined as difference in CHEMICAL INDUSTRY gender, age, nationality and culture/ The important link between hydrocarbons, GOVERNANCE ethnicity. energy and the industry was brought up In the scope of its continuous EPCA AND DIVERSITY PROJECTS in the meetings of 2009, 2013 and 2014. improvement efforts and in order to Under the guidance of the TDIC, EPCA Ample and affordable supplies of oil and create added value for its member asked McKinsey to make on behalf of gas were mentioned as a good reason companies, EPCA revisited its mission the EPCA Board a survey amongst to be positive about the future of the and strategy definition in 2008 and 2009 leading EPCA member companies petrochemical industry in 2009 and and in 2014 introduced a new Mission, active in diversity inclusion initiatives 2013 respectively by then ExxonMobil Vision, Ambition, Values and Strategic in their respective organizations. The Chemical President Steve Pryor and Dr. Theme Definition. results of this enquiry were shared in the Kurt Bock, CEO of BASF. In 2015 the EPCA Board issued a 2015 Diversity Inclusion session of the They underlined the sustainable effect of governance charter for EPCA explaining Annual Meeting and summarized in an renewables but agreed, with Prof. Niall all EPCA governance topics, as completed EPCA article on “diversity matters” that Ferguson and Laurence A. Tisch Professor by a risk-assessment tool and a manual can be downloaded from the website. of History at Harvard University, that book comprising 200 policies, all of renewables are not a viable substitute which were approved by the Board. In 2016, EPCA takes this initiative one for carbon-based fuels – coal, oil and After the merger of the Annual and step further with Accenture delivering gas – in a world where future energy Logistics Meetings in 2006 and the a speech during the diversity session demand will be escalating. In 2015, this introduction of more service provider of the 50th Annual Meeting. An article was confirmed by Philippe Sauquet, companies into the EPCA Board, the on the subject will be shared in- and President Refining & Chemicals and Logistics Committee as a statutory outside the EPCA network. Member of the Executive Committee body was replaced in 2008 by the of Total who stressed that renewable advisory SUPPLY CHAIN PROGRAM LEARNINGS FROM ANNUAL energy has a bright future but will only COMMITTEE (SCPC) at the same level MEETINGS 2009 - 2015 represent 5 percent of the supply in as the Young EPCA Think Tank (YETT). The Two EPCA Annual Meetings were 2040. However, the petrochemical and SCPC continues to develop the supply specifically dedicated to the future: plastics value chain plays a crucial role chain and logistics part of the Annual in 2008, the Monaco meeting addressed for enabling solar energy generation. Meeting and to propose to the Board “Chemicals on the Horizon 2030 and The importance of oil and gas for thought-provoking projects supporting Beyond”, and the Annual Meeting 2010 global geopolitics and economics was the improvement in chemical supply in Budapest looked at “Nine Billion highlighted by Pulitzer Prize winner Daniel chain management. People in 2050, the Chemical Industry Yergin, one of the world’s most notorious as an Enabler of Sustainable Solutions”. experts on energy. Dr. Bock warned all TALENT AND DIVERSITY However, the majority of the meetings people in the world to drastically change INCLUSION COUNCIL (TDIC) during that period looked at the future, their lifestyle if emissions reduction In 2015 the EPCA Talent and Diversity whilst underscoring the important link targets are to be met on a global scale. Inclusion Council (TDIC) was created between energy, hydrocarbons and He also called upon the industry to as an advisory body to the Board to the industry that was positioned as manage the risk of volatility of agricultural identify and promote diversity inclusion contributing to sustainable solutions commodities. best practices developed in- and outside for all. the chemical segment and make the
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EPCA HISTORY
SUSTAINABILITY recovery is possible only when ordinary Vice President of Shell Chemicals and In 2009, a very “diverse” panel composed citizens have money to spend. Daniele Ferrari, CEO of Versalis and of, amongst others, Gerd Leipold, Matrica, gave recommendations on Executive Director of Greenpeace, REPUTATION ENHANCEMENT, how to keep European petrochemicals and Joschka Fischer, Foreign Affairs TALENT, TECHNOLOGY & competitive. Professor Xavier Sala i Martin, Minister of Germany (1998-2005) and INNOVATION Chief Economist and Senior Director activist/leader of the Green Party in 2011 marked the International Year of of the World Economic Forum (WEF), Germany debated the double challenge Chemistry (IYC) as well as the 45th editor of the WEF Competitiveness of coping with the severe effects of the anniversary of EPCA. On this occasion, Report, and Professor of Economics economic downturn whilst continuing to Jeroen van der Veer, former CEO of at Columbia University, mentioned the embrace sustainability to fight climate Royal Dutch Shell, delivered a six-point clear link between competitiveness change. The conclusion was that the focus for improving the reputation of and innovation. Recognizing there chemical industry provides sustainable the industry: achieve zero accidents, are many ideas that are generated by solutions but should endeavour to be address public concern that fracking R&D, a lot are not implemented due more pro-active rather than reactive will contaminate drinking water, inform to an overcautious approach to failure. when it comes to supporting access everyone that the chemical industry is His advice is that “diversity generates to alternative sources of energy and the innovator of bio-based feedstocks innovation and we should “learn from emission reductions. and can develop modern materials from failure and embrace innovation”. In 2010 Columbia University Professor these feeds, continue the dialogue with Also, NATO Secretary General and Jeffrey Sachs, Director of the Earth governments to develop activities coping former Prime Minister of Denmark Institute, special advisor to the United with societies’ needs, and attract new (2001-2009) Anders Fogh Rasmussen Nations Secretary General and author of talent by showing the big contribution marked in 2015 the importance of the the “Millennium Goals” called upon the industry makes to society. digital transformation to bring economic the chemical industry to play a big role value around the world. in the transition to a low-carbon THE CLEAR LINK BETWEEN economy, development of renewable PEOPLE, COMPETITIVENESS AND energy, carbon capture and storage, INNOVATION EPCA EDUCATION electric vehicles and green buildings. In 2012, the key role of leadership and PROJECTS He furthermore asked the industry to people for innovation and business bring about sustainable agriculture and success was highlighted by the inspiring CARS AND CHEMISTRY – BERTHA clean water supplies, increase recycling messages of, amongst others, Dr. BENZ, FIRST TEST PILOT and use technology to eliminate toxic Ajit Baron Shetty, former Janssen During the 2009 meeting, the opening pollutants. With the signing of the Pharmaceutica and Johnson & Johnson, event in the Mercedes World featured a COP 21 agreement in Paris at the Soumitra Dutta, Dean Samuel Curtis joint EPCA-Cefic exhibition showing twelve end of 2015, these recommendations Johnson Graduale School of Management, Mercedes cars, each of them representing remain valid and should be addressed Cornell University and John Kao, Past a milestone during the 125 years (1885- in the debate about the future of the Chair of the World Economic Forum’s 2010) evolution of the car industry and chemical industry. Global Advisory Council on Innovation. showing the connection between In 2014, Prof. Joseph Stiglitz, winner To spur innovation, they recommend to the chemical and the automotive of the 2001 Nobel Prize for Economics, use open communication platforms with industry. As pedagogical support a highlighted that the growing income input of customers, going digital and that brochure was developed and a comic inequality in societies undermines “creativity is a skill, not a wish”. In strip published for youngsters and the economic performance and that a robust 2014, Graham van’t Hoff, Executive general public.
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EPCA HISTORY
The brochure is based on the history EDUCATION EVENTS AT ANNUAL 42nd President of the United States and of cars and petrochemicals and tells MEETINGS Founder of the Clinton Foundation. In the story of Bertha Benz, wife of Carl Since October 2011, each EPCA Annual 2014 EPCA brought the Belgian learning Benz, inventor and maker of the first Meeting has hosted an education event vehicle XperiLAB.be® to Vienna and gasoline-powered automobile. Carl with students or teachers, and promoted put it at the entrance of the EPCA Benz, founder of Mercedes-Benz, indeed one or more educational films made by conference hotel. XperiLAB.be® is a openly attributed his business success EPCA for youngsters, their teachers learning laboratory on wheels that goes to his wife. We owe this comic strip and and parents. to schools and public places in order to brochure to the contribution of past EPCA In 2011, a students’ workshop with give youth aged 10 to 14 the opportunity President Dr. Dominique Cruyt, former winners of the 2009 UNESCO Chemistry to visit the lab and understand the role Total executive. Olympiad contest was organized at science plays in everyday life. Prof. Condoleeza Rice, former US the Annual Meeting in Berlin bringing 729 pupils from 27 Austrian schools Secretary of State, promoted in 2009 together 14 students from all over the accompanied by 59 teachers were education for all regardless of gender. world and giving them the opportunity enthusiastic about their experience. Her Majesty Queen Noor of Jordan to learn about the chemical industry and An EPCA teachers’ workshop was also delivered a similar recommendation in bridge the gap between academia and organized. 2011, as a means to combat poverty the industry. The students met with the In 2015, an education event was integrated and protect the environment. EPCA Past Presidents and Supply Chain in the program of the meeting in which Program Committee representatives youngsters aged 16 to 21 were present. EPCA FILMS to learn “from within” about the many Bertrand Piccard, Initiator and President The involvement of EPCA in the making of different career opportunities. of the Solar Impulse project, shared educational films and becoming a “global On Sunday 7 October 2012, EPCA with the audience his passion for the partner of the UNESCO”, as well as a sponsored for the first time a kids’ airplane that flies only with solar energy, partner of European Schoolnet in Europe marathon (Budapest) reaching 93 schools making clear links between solar and the for the promotion of STEM education and 4,300 youngsters in Hungary. Lord petrochemical industry. This supported (Science, Technology, Engineering Sebastian Coe, Chair of the 2012 London the message of EPCA’s third educational and Mathematics) started in 2011, Organizing Committee for the Olympic film “Petro and Chemistry: Partnership for International Year of Chemistry (IYC). and Paralympic games, awarded the a Better Life” launched on the occasion These educational activities in addition winning team of young runners. During of the Berlin 2015 mini-marathon, as promote gender and cultural diversity the closing lunch, he explained how the well as the topics covered in the 49th inclusion and the chemical industry as chemical sector helped put sustainability Annual Meeting. a good industry to work for. at the heart of the 2012 games and urged On the occasion of the 50th Annual Three films have been made in this the audience to connect and engage Meeting in Budapest, the finals of the connection: “Chemistry All about with youngsters using language and European Youth Debating Competition You” (2011), “Science: Where Can technology they understand. takes place in the main hotel and winners It Take You?” (2013) and “Petro and In 2013, EPCA sponsored the kids’ are awarded during the closing lunch. Chemistry: Partnership for a Better marathon of the world renowned Berlin This competition in 9 European countries Life” (2015) and were completed by marathon allowing a YETT member, aimed at boys and girls aged 16 to 19 6 role model films, featuring young, who is also an athlete, to make the link years old is a joint project co-organized talented men and women working for between sports and chemistry. This event between EPCA, Plastics Europe and EPCA member companies and being was widely covered in the local press Young Leaders GmbH, and sponsored active in EPCA advisory bodies (YETT together with the fact that the closing by EPCA. and TDIC). lunch was addressed by Bill Clinton,
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EPCA HISTORY
EPCA AND SUPPLY CHAIN Christopher of Cranfield University in the the right talent for the different jobs FOUR INTERACTIVE SUPPLY UK mentioned the importance of managing and reaching corporate goals, with a CHAIN WORKSHOPS resources sustainably and the need for specificfocus on diversity inclusion. the chemical industry to hire a workforce The founding partner of Borderless Four interactive supply chain specialized in one discipline but with cross- Research shared with the audience the workshops took place during the functional skills. He translated Darwin’s results of the 2014 EPCA/Borderless period 2008 – 2016. These workshops “survival of the fittest”, into “survival of survey, which was conducted in the broadened the previous EPCA workshop the one who is most responsive to EPCA supply chain and logistics leaders’ focus of promoting Responsible Care change”. An Ikea representative indicated community on the topics of leadership, and European Land Logistics “best the need for supply chain managers to people and organizations. A key take practices”, to addressing the improvement develop sustainable products, gain carbon away of his talk was the reluctance of of supply chain management. neutrality, turn waste into a resource and the chemical industry to look for fresh design a supply chain from “cradle to ideas outside the industry. The first interactive workshop took place cradle” warning “chemical footprint” in Frankfurt on 2 and 3 March 2010 and labeling requirements were to be expected Professor Marc Buelens of Vlerick was dedicated to “Coming Out of the from retailers and end-consumers. Business School, quoting Sumantra Economic Downturn”, linked with Goshal, indicated “You cannot managing “green” supply chains, echoing In Frankfurt on 12 and 13 May 2012 manage third generation strategies the theme of the 2009 Annual Meeting. the workshop on “building resilient with second generation organizations supply chains”, proposed practical ways and first generation managers”. The Delegates were advised to prepare to implement the recommendations importance of people in achieving for a volatile and unpredictable future of the first two workshops. The use revenue growth, improving performance and to look at the whole supply chain, of scenarios for demand planning, and delivering results was highlighted from suppliers of products and logistics especially unlikely events, was suggested. and the Professor concluded that a services, to producers, customers and Examples were given on how to third generation organization favors even end-consumers. The fact that the build resilience through partnerships, collaborative networks, transfer of chemical industry is at the center of with due regard to competition law effective knowledge and game- all other industries was confirmed at compliance. Differentiating service changing innovation. “If real progress this workshop. For the “greening” of offerings by segmentation of customers is to be made on diversity inclusion, supply chains the audience learned the without compromising scale benefits there is a need to put actionable policies importance of integrating environmental and complexity management was also in place”. and corporate social responsibility reporting recommended. in production, procurement and customer The content of this workshop was much delivery activities and that the industry The fourth interactive workshop organized broader than supply chain and logistics needed to prepare for carbon reduction in Brussels on 2 and 3 June 2014 was issues and inspired the organization of labelling and standards as well as auditing dedicated to “Talent & technology: the first “diversity matters” workshop tools. On 15 and 16 March 2011 in Brussels Drivers for Supply Chain Leadership”, during the 48th Annual Meeting in Vienna during the workshop themed “21st based on the learning from the 46th in October 2014 which resulted in Century Supply Chains for the Chemical Annual Meeting in Budapest of 2012.The the creation of the EPCA Talent and Industry”, the audience was confronted audience was informed by representatives Diversity Inclusion Council (TDIC) on with the increasing impact of the “Internet of EPCA member companies Dow 10 June 2015. of Things” on logistics and supply chain and DAMCO about their respective management. Emeritus Professor Martin company experience in developing
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EPCA HISTORY
2013 EPCA REPORT ON This Charter was launched in 2006 at “SUSTAINABLE CHEMICAL the first UN International Conference SUPPLY AND LOGISTICS CHAINS, on Chemical Management and pushed THE PATH FORWARD” the adherence to the Responsible Care Following a leader’s breakfast at the and sustainability principles out of the Annual Meeting of 2011 three “think chemical factory gate into the whole tank” working groups were established chemical supply chain. Worthwhile to in 2012. The selected issues were how note is that, as has been described to manage complexity and uncertainty in in the period 1990-2008, with the the supply chain, examine collaborative input and support of EPCA, Cefic and approaches and possible barriers against ECTA, European chemical producers same, look at technological innovations and logistics service providers already coming from IT development as well applied this approach 10 years before as equipment improvement. Thirty- the launch of the ICCA Charter. In that four practical cases coming from “real perspective CDI and ICE have been life” experience were brought to the integrated in the 2013 EPCA report as working groups by participants; the “best practice” cases. cases were from in-and outside the It is widely accepted that the report chemical industry. The learning from proved to be a success. According to these cases can easily be applied by Paul Gooch, member of the Supply supply chain practitioners in their daily Chain Program Committee (SCPC), operations and facilitate implementation ‘clients continue to eat up the findings of sustainability principles in chemical of these reports. The case studies supply chain management and logistics. within the sustainability report are The findings of the working groups were proving to have a long shelf-life, they summarized in a single summary report are still being referenced and used as containing a special section promoting the templates, three years after the report trailblazing work of the global chemical was published’. industry under the Responsible Care initiative and linking, under the ICCA Charter, this initiative with reaching the United Nations’ sustainability goals.
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EPCA HISTORY
EPCA PRESIDENTS EPCA VICE- 2012 PRESIDENTS J. VAN DEN BERGH 2009 - 2010 2008 - 2009 EVONIK INDUSTRIES Germany DR. A. HEUSER T. WALTHIE BASF THE DOW CHEMICAL CO. 2011 - 2013 Germany Switzerland P. HOLICKI 2010 - 2012 2009 - 2010 DOW EUROPE The Netherlands T. CROTTY T. CROTTY INEOS GROUP INEOS GROUP 2013 - 2014 United Kingdom United Kingdom T. CROTTY 2013 - 2014 2009 - 2010 INEOS United Kingdom J. VAN DEN BERGH J. P. BROEDERS EVONIK INDUSTRIES ROYAL VOPAK 2014 - 2016 Germany The Netherlands O. GREINER 2014 - present 2010 TOTAL PETROCHEMICALS & REFIN- ING T. CROTTY O. GREINER Belgium INEOS GROUP TOTAL PETROCHEMICALS United Kingdom & REFINING 2014 - present Belgium PROF. DR. R. DIERCKS 2009 - 2011 BASF Germany G. VAN‘T HOFF SHELL CHEMICALS 2016 - present United Kingdom M. SCHULLER 2010 - 2013 ARKEMA France J. A. HAMMER ODFJELL Norway
58 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Chapter 5 — Recovery from Recession and Continued Global Expansion - 2009 to Present
EPCA HISTORY
CONCLUSIONS and conditions. In-sourcing of meeting the organisation is in line with legal, OF 50 YEARS OF administration was part of this exercise. governance, risk management and EPCA Though one-to-one business meetings sound economic best practices. This are the driving force of EPCA’s success, contributes to the perpetuity of the Looking at the evolution of EPCA from delegates who take the time to attend association, supported by competent its inception up to now, one can see the the business sessions appreciate the Board and advisory body members. All organization has become truly global quality of speakers and content and the of the above team efforts help EPCA in and adapted to its customers’ and learning that can be gained from the promoting the chemical industry as a stakeholders’ requirements, led by a discussions. Panel debates bringing good industry to work for and as an group of leaders who are members of together speakers with global reach from innovative solution provider, responding, the Board and advisory bodies which diverse backgrounds and who jointly in a sustainable way, to the planet and the Board has created. EPCA member analyse a central theme from different its global population’s evolving needs. companies are from all over the world angles contribute to the development and currently cover almost all segments of EPCA’s think-tank and transfer-of- This is the story of a passionate in the chemical industry, inclusive of learning capabilities. journey with an innovative industry traders/distributors, logistics service EPCA’s continuous communication segment that supports the building of provider companies and other service and publication efforts make sure the a better future for all. providers in the value chain, inclusive of learning from key messages is kept ports and organizations which promote and delivered in a written report or other the chemical industry investments in form that can be used as a source of their region. inspiration for further study or reflection. Facts and figures are the best Encouraging youngsters to embrace performance indicators. 50 years STEM education and to work for our after the foundation of EPCA, the industry is part of these efforts. association has more than 730 member In the Diversity Inclusion, Education companies and nearly 3,000 annual and Supply Chain projects selected meeting attendants, who “physically” by the EPCA Board the association join the EPCA network at least once endeavours to identify and promote best a year. They come from all continents, practices from inside and outside its literally “moving their offices” during the network. These projects aim at supporting EPCA Annual Meeting. The organisation’s member companies in their continuous financial situation is healthy and under improvement initiatives, all of which are control. inspired by the principles of the United In the past two decades EPCA has clearly Nations’ Global Compact and the Global positioned itself as a service provider for Chemical Industry’s Responsible its member companies and delegates, Care Program. The members of the using total quality management methods the EPCA Board and advisory bodies act of getting feedback from its customers. as ambassadors of EPCA initiatives in Such feedback is leveraged as a tool their respective organizations and help for continuous improvement delivering EPCA in evolving from exchanging views to individual delegates — wherever to delivering useful implementation possible — customized solutions, within examples for our member companies. the scope of EPCA’s meeting terms The continued professionalization of
59 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY OUTLOOK OPENING NEW HORIZONS
60 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Outlook — Opening New Horizons
CHEMICAL INDUSTRY & LOGISTICS & SUPPLY CHAIN HISTORY
THE FUTURE OF THE Direct methane coupling to ethylene, various groups to the use of food to PETROCHEMICAL as currently being researched at make chemicals. Waste from crops is Massachusetts Institute of Technology a less desirable feedstock in any case, INDUSTRY (MIT) and elsewhere, could conceivably which brings me to the third reason. It WHAT IS NEXT? lead to the construction of a number of is difficult logistically and expensive to What’s ahead for the petrochemical new ethylene plants with somewhat harvest and transport many thousands industry? In order to paint a substantiated better economics than current ethane of tons of waste crops to a central plant image of the future of the petrochemical crackers. That will put these new producers (or more likely many plants) that would industry and its service sectors an at the bottom of the “cost curve”, with produce “petrochemicals” made the old evaluation of several influencing factors shale-based and other ethane crackers fashioned way. is necessary. To get a broad overview also still very competitive. But this will considering economic, social, scientific, lead to some shutdowns of expensive Finally, there is the question of shale gas and other developments we interviewed a liquid crackers. in China, which has even larger shale leading consultant, an academic, a former resources than the US. It will start shale head of a major player’s petrochemical However, the need for propylene, production at some point in the next few operations and a chief executive of a butenes and other liquid cracker by- years. Little is known about the liquids leading logistics company. Here are their products will keep many of these plants content of Chinese shale gas. Many of projections of the future global outlook for in operation. The same general argument the reserves are very deep. And there petrochemicals over the next 25 years. about obsolescence can be made for is the issue of water shortages. So, possible new lower cost (e.g. one-step) there are a number of imponderables. PETER SPITZ, SENIOR ADVISOR TO technologies for styrene, phenol, and In my base case, some Chinese shale ARTHUR D. LITTLE’S CHEMICAL PRACTICE, methanol-to-aromatics. gas-based ethylene will reduce Chinese FOUNDER OF INTERNATIONAL CHEMICAL ethylene derivative imports into the CONSULTANCY CHEMSYSTEMS, USA, AND There will be more good news for country over the next 25 years. AUTHOR OF THE BOOK “PETROCHEMICALS existing petrochemicals in respect of — THE RISE OF AN INDUSTRY” (1988). possible competition from renewable feedstock-based key “petrochemicals”. “No new technology will Let me present a base case scenario, while It is hard to see how these will displace recognizing that conventional wisdom hydrocarbon-based lower olefins and dramatically affect the structure of and knowledge used for forecasting can BTX aromatics — benzene, toluene, the global industry.” be fallible (viz. the US shale gas boom xylenes — for three important reasons: which nobody foresaw). Firstly, the economics of the two biomass The easiest part of my 25-year projection conversion options — via fermentation VERA ZAMAGNI, is to predict that, regardless of all future and synthesis gas — are and will remain PROFESSOR OF ECONOMIC HISTORY, research in hydrocarbon conversion to too expensive unless crude oil and natural BOLOGNA UNIVERSITY, ITALY petrochemicals, no new technology gas prices permanently spike to very high discovered during the forthcoming years levels. Secondly, rapidly increasing global Over the next 25 years there will be changes will dramatically affect the structure demand for food will make it unlikely that in the location of bulk chemicals plants, like of the global industry. There will be so corn, soybeans, and cane sugar will be those for petrochemicals. In my opinion, much installed conventional capacity that diverted to chemical uses in quantities to Europe and the USA will maintain a few no new process can obsolesce most displace current petrochemicals. Moreover, commodity chemical plants owned by a of the existing players in the industry. there will be increasing resistance by few giant companies.
61 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Outlook — Opening New Horizons
CHEMICAL INDUSTRY & LOGISTICS & SUPPLY CHAIN HISTORY
But most of the commodities, such materials and energy savings, the industry the US. It will be a big challenge for as petrochemicals, will be produced will continue to be highly flexible and Europe’s petrochemical industry as well elsewhere. Demand will be growing innovative in terms of adapting these because Europe will also be seen by mostly outside Europe and the USA technologies and processes to changing both Middle East and US petrochemical — in Asia in particular. In specialties feedstock and energy situations. exporters as a market for their products. Europe and the US will continue to be global leaders, but not necessarily From a consumption point of view, growth US shale will also have other through huge corporations. There will will remain limited in the developed repercussions. Shale ethane is already also be an increase in diversification economies of North America and being shipped across the Atlantic to the UK of feedstocks away from crude oil Western Europe. However, there is to be used as a petrochemical feedstock, derivatives. European and American still huge growth potential in many parts cheaper than any available in Europe. producers will increasingly have to take of Asia, Eastern Europe, South America Reliance, the big Indian petrochemicals into account environmental issues. and even Africa. China’s economic producer, is also planning to ship shale development has shown what can be ethane into India. Shale gas will also soon done in realising this potential. But it be produced outside the US. At Ineos we “Demand will be growing mostly will not be an easy task. believe that will happen in the UK. There’s still public resistance in the country but outside Europe and the USA — in Asia we hope that will change after Brexit. in particular.” “Petrochemicals are and will remain There could be opportunities in other European countries like Germany and essential for modern life and France. The extent of production outside prosperity.” the US will depend on extraction costs WERNER PRAETORIUS, which will be influenced by technology FORMER PRESIDENT BASF GLOBAL developments. PETROCHEMICALS, MEMBER OF THE BOARD OF EPCA AND THE ASSOCIATION TOM CROTTY, DIRECTOR CORPORATE The availability of shale gas will put a OF PETROCHEMICAL PRODUCERS EUROPE AFFAIRS, COMMUNICATIONS AND cap on crude oil prices and as a result (APPE). BUSINESS DEVELOPMENT NEW petrochemical feedstock costs. We TERRITORIES OF INEOS, EPCA won’t see a return to high oil prices in Petrochemicals are and will remain PRESIDENT 2010 - 2012 AND 2014 the near future. One big advantage of essential for modern life and prosperity in - PRESENT shale is that its production levels are developed societies. We are surrounded by very responsive to market conditions. innovative products and life style solutions The big change in the global petrochemical Output can be subtly tuned to current which are only made possible through sector in the 4-5 years in which I have demand. There will be no big changes petrochemical products and building been EPCA President has been the in sources of feedstocks, e.g. between blocks. For good reasons, petrochemicals shale gas boom in the US and its impact fossil fuels and bio sources. Biomass are called the “immortal products” as on US industry. It has meant that the won’t be able to compete on costs. But they are the enablers for a vast variety Middle East will no longer be the world’s petrochemicals will help combat climate of industrial and consumer goods. only petrochemicals production centre change by providing the plastics and with low-cost feedstocks. Low-cost materials needed for light-weighting While the technologies and processes petrochemicals will be imported into Asia, of low energy-consuming vehicles for petrochemicals have matured with the world’s main regional petrochemicals and for wind turbine and solar panels only limited potential for further raw market, from both the Middle East and to provide renewable energy.
62 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Outlook — Opening New Horizons
CHEMICAL INDUSTRY & LOGISTICS & SUPPLY CHAIN HISTORY
The petrochemical sector in the drop from 80 percent of the energy developed world will continue to be “petrochemicals can make mix in 2010 to 65 - 67 percent in 2050 dominated by large companies able with total energy demand growing by to operate on a big scale and carry a huge contribution to more than 50 percent over that period. out consolidations of parts of the petrochemical sector like those done the fight against climate As petrochemicals demand will continue successfully by Ineos and Huntsman to grow, the share of fossil fuel processing Corporation. The other end of the going into petrochemical feedstocks will spectrum will be occupied by small change.” rise at the expense of that for producing companies supplying niche markets Tom Crotty transport fuel. However the petrochemical with specialty petrochemical derivatives. industry will have to face pressures to
There will be few opportunities for reduce CO2 emissions. The industry will medium-sized players. Most of the have to cooperate much more strongly in big international oil companies will aspects such as eliminating heat waste continue to pull back from petrochemicals REIN WILLEMS, FORMER PRESIDENT in petrochemical sites, CO2 capture, production because they don’t see OF SHELL NEDERLAND, FORMER process intensification technologies much long-term potential in it. But in LEAD OF NETHERLANDS’ TOP and the need to use renewable energy the Middle East and Asia the corporate SECTOR CHEMISTRY AND FORMER in chemical processes. trends will be much the same as they CHAIRMAN OF THE ASSOCIATION OF were in the 1960s and 1970s in North DUTCH CHEMICAL INDUSTRY (VNCI), We will see in the next 10 to 20 years a America and Western Europe, where EPCA PRESIDENT 2000 - 2003 growth in biobased chemical products oil companies had a major role in the but these will not be developed by petrochemical sector. We‘re likely to The chemical industry will undergo the large petrochemical firms. Instead see companies like Saudi Arabia’s state big changes in the future, essentially new companies — and some existing oil company Saudi Aramco become because of the pressing need to reduce chemical players — will expand the a major players in petrochemicals. CO2 emissions and the changes taking biobased sector. Petrochemical players In China Sinopec could emerge as a place in the energy industry. will continue to play a big role basically strong global force in petrochemicals. with ethane and propylene and the Natural gas will take a growing share aromatic-based chemicals — benzene, Overall the future is looking very bright of fossil fuel consumption to become toluene, xylene (BTX). The newcomers for the industry. There will be plenty of an increasingly important part of the will challenge the global players by being demand, especially in the developing fossil-fuel energy mix. Coal’s share more cost conscious and focused. world with petrochemicals helping to will not rise, while the share of gas will improve people’s standard of living. But possibly overtake that of oil. However dramatic changes are unlikely. the industry will have to do more to Global crude prices will not return to explain to people the extent to which Nonetheless demand for energy will the $100-per-barrel levels. They will be petrochemicals have a positive impact still grow so that in 2100 it will be capped by the relatively low cost of on their lives and that, above all, they double the present level. Hence the shale oil and gas. can make a huge contribution to the transition to non-fossil fuels will not fight against climate change. immediately result in weakening demand for fossil fuels. According to figures from organizations like the International Energy Agency, total fossil fuel will
63 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Outlook — Opening New Horizons
CHEMICAL INDUSTRY & LOGISTICS & SUPPLY CHAIN HISTORY
Current patterns in the trading and HANS-JÖRG BERTSCHI, Whilst some older petrochemical plants distribution of petrochemicals will be CHIEF EXECUTIVE AND CHAIRMAN, in Europe might disappear in the coming maintained but there will be increasing use GLOBAL LOGISTICS COMPANY decades, our continent has a tremendous of IT technologies. There may even be a BERTSCHI GROUP, SWITZERLAND opportunity to be the future powerhouse revival of e-commerce in petrochemicals. for the development and production The future of logistics in the chemical of sophisticated speciality chemicals. In other words petrochemicals have industry will be very dynamic and Innovation, global market orientation and a bright and challenging future. EPCA fascinating. Several trends will shape strong cultural influences, as well as an will continue to play its contributing role this future. 3-D printers might reduce experienced chemicals workforce, will with the help of chief executives like the need for some transportation of play an important role here. The same Cathy Demeestere. They will have to finished products. However, for a ingredients will probably be the key stand on the shoulders of a giant lady. chemicals industry which is based on for the future success of the European Thanks Cathy! intermediate products, globalisation chemical logistics sector in the world. will be the trendsetter. The industry is a I do see a bright future for our sector regional industry currently developing into — we have the best opportunities to a global industry. In 2000, only 5 percent be leading global players in even more “The chemical industry will undergo of chemical products were exchanged globalised markets in two decades. big changes in the future.” between the regions. Today it is about What a great sector to work for! 10 percent. Experts estimate that by the year 2020 it will be 20 percent. What a great challenge for our industry! “Operational safety and
Global chemical supply chains are environmental problems are a major by their nature very complex given issue in chemical supply chains.” the characteristics of what are often hazardous products. In emerging economies, operational safety and environmental problems are a very major issue in chemical supply chains. A lot of management attention, training and investments will be required to overcome these huge challenges over the next two decades.
The Internet of Things (IoT) — the network connectivity allowing exchange of data between objects — will make transport equipment, infrastructure and also the products themselves smart and communicative. New supply chain management concepts and solutions will emerge based on distributed and mobile intelligence.
64 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Outlook — Opening New Horizons
EPCA HISTORY
EPCA AND Therefore, networking organizations like THE FUTURE EPCA that facilitate these “physical” encounters and deliver “food for thought” CATHY DEMEESTERE, CEO, have a bright future, provided they are EUROPEAN PETROCHEMICAL managed with the same governance ASSOCIATION (EPCA), BRUSSELS, principles as companies quoted on the BELGIUM stock exchange and there is a fruitful cooperation between the association and The continued success of EPCA meetings, its member companies. By embracing seminars, working groups and workshops diversity and innovation, challenging demonstrates the need for people to “business as usual” for continuous “physically” meet in order to know improvement and aligning with customers’ and appreciate each other better and requirements, they add value for their to build trustworthy and respectful members and stakeholders. business relationships. The events also As President Bill Clinton told the audience offer delegates the opportunity to get at the EPCA Annual Meeting in 2013: access to speakers and content they “we are all in this together”. normally would not come across in their day-to-day business, thus, opening new horizons of thought and providing timely information about the next “big “Networking thing” that may impact their operations and business success. Whatever the current and future organizations like EPCA technological (r)evolution, opinion makers and leaders from all horizons, whether have a bright future.” these are academics, politicians, artists or captains of industry, recommend building empathy and collaborative approaches between all stakeholders to achieve lasting results.
65 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Glossary GLOSSARY
ACC American Chemistry GTL Gas-To-Liquids SEF Specialist Engineering Council HDPE High-Density Polyethylene Firms APLA Latin-American HSE Health, Safety and SQAS Safety and Quality Petrochemical Association Environment Assessment System ARG Aethylen-Rohrleitungs- IMCO Inter-Governmental STEM Science, Technology, Gesellschaft Maritime Consultative Engineering and ASEAN Association of Southeast Organisation Mathematics Asian Nations IMO International Maritime TDIC Talent and Diversity BP British Petroleum Organisation Inclusion Council BTX Benzene, Toluene, Xylene LDPE Low-Density Polyethylene UAE United Arab Emirates CCS Carbon Capture and MARPOL International Convention for YETT Young EPCA Think Tank Sequestration the Prevention of Pollution Cefic European Chemical from Ships Industry Council MRP Manufacturing Planning CMA Chemical Manufacturers’ Tools Association (USA) MTO Methanol-To-Olefins COMECON Council for Mutual NAFTA North American Free Trade Economic Assistance Agreement CTO Coal-To-Olefins NGO Non-Governmental ECRTA European Chemical Road Organisation Transportation Association NPRA National Petroleum ECTA European Chemical Refiners Association Transport Association OPEC Organisation of Petroleum EPA Environmental Protection Exporting Countries Agency OTC Oil-To-Chemicals EPCA European Petrochemical PMMA Polymethyl methacrylate Association PVC Polyvinyl Chloride ERP Enterprise Resource R&D Research and Development Planning REACH Registration, Evaluation, ETS Emissions Trading System Authorisation and FDI Foreign Direct Investment restriction of Chemicals GCC Gulf Cooperation Council SBR Styrene-Butadiene Rubber GPCA Gulf Petrochemical SCPC Supply Chain Program Association Committee
66 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY References REFERENCES
Werner Abelshauser, Wolfgang Keith Chapman. The International Peter H. Spitz (editor). The von Hippel, Jeffrey Allan Johnson, Petrochemical Industry — Evolution Chemical Industry at the Millennium Raymond G. Stokes. German and Location. (Blackwell, 1991) — Maturity, Restructuring and Industry and Global Enterprise. Globalisation. (Chemical Heritage BASF: The History of a Company. Stuart Emmett, Barry Crocker. The Press, 2003) (Cambridge University Press, 2004) Relationship-Driven Supply Chain — Creating a Culture of Collaboration H. Harry Szmant. Organic Building Fred Aftalion. A History of throughout the Chain. (Gower, 2006) Blocks of the Chemical Industry. International Chemical History (John Wiley & Sons, 1989) — from the ‘Early Days’ to 2000. Louis Galambos, Takashi Hikino, (Chemical Heritage Press, 2001) Vera Zamagni (editors). The Wiley Critical Content. Petroleum Global Chemical Industry in the Age Technology, Volumes 1 & 2. (John Ashish Arora, Ralph Landau, of the Petrochemical Revolution. Wiley & Sons, 2007) Nathan Rosenberg (editors). (Cambridge University Press, 2007) Chemicals and Long-term Economic Harold D.A. Wittcoff, Bryan Growth — Insights from the Michael Grabicki. Breaking New G. Reuben, Jeffrey S. Plotkin. Chemical History. (John Wiley & Ground — The History of BASF in Industrial Organic Chemicals. (John Sons, 1998) China from 1885 to Today. (Hoffmann Wiley & Sons, 2013) und Campe, 2015) Kenneth Bertrams. Solvay-Une Donald F. Wood, Anthony Barone, enterprise au Coeur de l’Histoire, Albert V.G. Hahn. The Petrochemical Paul Murphy, Daniel L. Wardlow. 1863-2013. (Cambridge University Industry — Market and Economics. International Logistics. (Chapman & Press, 2013) (McGraw-Hill Book Co., 1970) Hall, 1995)
Kenneth Bertrams, Ernst Yehuda Hayuth. Intermodality: Daniel Yergin. The Prize — the Epic Homburg, Nicolas Coupain. Solvay: Concept and Practice — Structural Quest for Oil, Money and Power. History of a Multinational Family Changes in the Ocean Freight (Simon & Schuster, 1991) Firm. (Cambridge University Press, Transport Industry. (Lloyd’s of 2013) London Press, 1987) In addition to the books listed above, the editors consulted a variety of Rondo Cameron. A Concise Carol Kennedy. ICI — The Company online and printed trade, scientific Economic History of the World that Changed Our Lives. (Paul and academic magazines, journals (Oxford University Press, 1993) Chapman Publishing, 1993) and publications on chemicals, petrochemicals, science, industry, Alfred D. Chandler, Jr. Scale and William Molle, Egbert Wever. oil, gas and coal, economics and Scope — The Dynamics of Industrial Oil Refineries and Petrochemical finance. Capitalism. (Harvard University Industries in Western Europe — Press, 1990) Buoyant Past, Uncertain Future. (Gower, 1984) Alfred D. Chandler, Jr. Shaping the Industrial Century — The Remarkable Peter H. Spitz. Petrochemicals — Story of the Evolution of the Modern The Rise of an Industry (John Wiley Chemical and Pharmaceutical & Sons, 1988) Industries. (Harvard University Press, 2005).
67 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Photo Credits PHOTO CREDITS
All photos © EPCA except those specified here:
BASF p. 11 Bayer p. 7 BP p. 1 Callebaut Vincent p. 60 Evonik p. 21 Hapag-Lloyd p. 1 Royal Vopak p. 32 Shell p. 48 Shutterstock p. 1 Solar Impulse p. 1 Solvay p. 1
68 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY Acknowledgements
ACKNOWLEDGEMENTS
We are grateful to Philip Browitt, Demeestere, Johan Devos, Paul Gooch, who dedicated their time reading the Hans-Joerg Bertschi, Tom Crotty, Jan Jan Hessel Kruit, Boy Litjens and Dr manuscript, appraising the layout drafts Hessel Kruit, Paul Gooch, Professor Walter Thünker who served on our and sharing their comments with us, Ernst Homburg, Dr Werner Prätorius, editorial committee for this book and improving the quality of this book. Peter H. Spitz, Professor Ray Stokes, provided valuable expertise that greatly Theo Walthie, Fred Wehmeier, Rein assisted the editing. Last but not least, we appreciate the Willems and Professor Vera Zamagni, support of companies and institutions who accepted to be interviewed and We also acknowledge the help of the that provided images and approved in that line improved the manuscript members of the EPCA Board, the their use in this book (cf. the photo content significantly. Supply Chain Program Committee, credits section). the EPCA Communication & Education We are thankful to Nicolas Coupain, manager and the EPCA member company Caroline Ciuciu, Tom Crotty, Cathy representatives not mentioned here
IMPRINT
Editorial team Graphic design Managing Editor: Dr. Michael Reubold Account Manager: Catherine Zorn (Wiley-VCH, Weinheim, Germany) (Absolute Agency, Brussels, Belgium) Contributing Editors: Sean Milmo Art Director: Arnaud Buffet (Braintree, United Kingdom), (Absolute Agency, Brussels, Belgium) Martin Todd (Brussels, Belgium) Copy Editors: Dr. Ralf Kempf, Thorsten Kritzer (Wiley-VCH, Weinheim, Germany)
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69 PETROCHEMICALS AND EPCA - A PASSIONATE JOURNEY EPCA is the quality network in Europe for the global chemical business community consisting of chemical producers, their suppliers, customers and service providers. It operates for and through more than 700 member companies from 53 different countries that represent an aggregate turnover of over €4.4 trillion and employing over 5.6 million people. EPCA serves as the platform to meet, exchange information and transfer learning, as well as a think tank for its members and its stakeholders.
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