Growth, Successes and New Horizons

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GROWTH, SUCCESSES AND NEW HORIZONS

ANNIVERSARY SPECIAL

Chemical major celebrates 20 years and looks to the future

Challengers for the America’s Cup 2021 20TH ANNIVERSARY STRATEGY

was simple: to find unloved assets, invest in their facilities, lower the cost base and rejuvenate them. The formula was to prove hugely successful - the acquisition of non-core businesses from chemical BUILDING majors including Dow, Dupont, ICI, BP and BASF helping INEOS achieve phenomenal growth. The foundations were laid and momentum was building. A LEGACY The purchase of the acrylics business in 1999 and chloralkali business of ICI in 2001 had now propelled INEOS to the second largest chemicals manufacturer in the UK. It had sales of around £1bn and around 2,500 employees – one of whom was Tom Crotty, now INEOS’s director of public affairs. “I think the fact we were a private company really made a difference,” notes Crotty. “Petrochemicals is a cyclical business and we were always able to take the long view; we’re not beholden to shareholders or analysts looking at our quarterly results. “Early on, we developed a system for managing our businesses that we’ve applied consistently. It’s a simple approach where we integrate new businesses into the group and apply a very straightforward focus on costs.” With more than 20,000 employees spread across 171 sites Each business operated independently and had its own board – a rarity for a in 24 countries, and sales in excess of $60bn, INEOS has large petrochemical producer, he notes. clearly come a long way since its humble beginnings “We have a very decentralised structure that means we don’t carry the overheads that are typical for a company of our size. Every business is responsible rying to choose a single defining Above - In just corner with INEOS,” says Ratcliffe. “Last for itself and that avoids having moment in the history of INEOS two decades, year was tremendously successful - one of unproductive spend. It also makes us INEOS has grown is no mean feat. It could be the our most active and profitable. We’ve had much more agile and efficient.” T to become one acquisition that literally tripled the size of of the world’s record profits of $7bn, record turnover of Just a few years in and INEOS was the business overnight, or when it emerged largest chemical $60bn, 85% of our businesses beat budget, growing rapidly. Yet it was the move to from the worst economic downturn in companies 50% of our businesses beat their all-time buy Innovene, BP’s olefins, derivatives history with the renewed confidence of records, and we have five businesses at, and refining subsidiary, for $9bn that its investors and support of the banks. or approaching, $1bn of EBITDA. We’ve really took the business to the next level. Perhaps it was the tense negotiations never seen numbers like that.” The deal in December 2005 instantly with the unions as it saved its ailing Ratcliffe’s background in chemical positioned INEOS among the world’s Grangemouth facility, or its $1bn plan to engineering and a stint in venture capital leading players, creating a combined build a fleet of tankers capable of crossing paved the way for the management buyout business with a turnover of around the Atlantic full of low-cost feedstock. of Inspec - the business he helped found - $33bn, with 68 manufacturing facilities All have been significant – each an and on 4 May 1998, INEOS was born. capable of producing over 30m tonnes important part of the jigsaw which has The name was a portmanteau, an of petrochemicals. helped establish INEOS as one of the amalgam of two words from Latin and Ratcliffe admits it was a major world’s leading chemical companies. Greek that roughly translate as “new milestone. “We gambled somewhat In the space of just two decades, dawn” or “beginning”. but you’re only going to get one INEOS has become a major The philosophy of the new business opportunity like that in your life. It manufacturer of petrochemicals, specialty chemicals and oil products. Today, it is “You never know what’s around the corner with INEOS. ranked the world’s fourth largest chemical This year has been tremendously successful - one of our company in terms of sales, among the most active and profitable” Top 10 oil and gas operators in the North Sea, and its chairman Jim Ratcliffe now heads the UK rich list. “You never know what’s around the Jim Ratcliffe, Chairman, INEOS

2 was transformational for INEOS. It venture with PetroChina to become Before long, INEOS had cemented its transformed us from being a very serious known as Petroineos. position as a Top 10 player in the North chemical entity to being one of the very That same year, plans were unveiled Sea with the addition of the oil and gas largest chemical entities worldwide.” about the formation of a new styrenics assets from Denmark’s DONG Energy, Yet with the highs come the lows, JV with German major BASF. The new gaining access to three major fields in and shortly afterwards in 2008, the venture would be called Styrolution, with Norway, Denmark and Shetland. global economic downturn sent anticipated annual sales of around €5bn. “It was fortuitous that we were in the shockwaves throughout the industry It would combine their global business right place at the right time to make and hit INEOS hard. activities in styrene, polystyrene (PS), these acquisitions. It worked well for us,” As the oil price lurched from $140/ acrylonitrile butadiene styrene (ABS), says Crotty. “Many of the assets were bbl down to $40/bbl in the space of styrene-butadiene block copolymers (SBC) quite new – and of very high quality. six months, it stripped value from the and other styrene-based copolymers. We brought in some very good people business and triggered several banking Yet it was perhaps another and that gave us a lot of the subsurface covenants, forcing some tense discussions development in 2012 that most took the expertise we were looking for.” with lenders. Over the next 12 months, industry by surprise. This was soon followed by the the banks took €846m from the company With the US riding the shale wave and acquisition of the Forties Pipeline System in fees and penalties. North Sea gas supplies waning, INEOS (FPS) from BP – a 235-mile link between “It didn’t change the way we’d run wanted to test the water and see whether 85 North Sea oil and gas assets and the our business but it was a turning point those advantaged feedstocks could be mainland that delivered almost 40% of in the way we related to our lenders,” transported from the other side of the the UK’s supplies. notes Crotty. “When the downturn hit, Atlantic over to European shores. With more of its assets UK based and our EBITDA halved overnight and we Not for the first time in INEOS’s the government now far more supportive could see we were about to trigger some history, some said it was impossible. They of business, INEOS decided to move its of our banking covenants. It wasn’t a cash were wrong. “At INEOS, we headquarters back to Britain in 2017. problem but an accounting problem.” The $1bn project would see a fleet never rest on our There has since been more expansion To resolve the situation, difficult of purpose-built ships transport ethane laurels. When we and investment, including a commitment negotiations started with a consortium from the US to INEOS sites in Norway achieve a target, to increase the capacity of its existing of over 230 banks and investors, and and the UK - a 3,800 mile (6,116km) we always look crackers. It also unveiled some other, eventually a new five-year business plan “virtual pipeline”. ahead to the next slightly less conventional, plans too. was drafted. It was to be a real sea change for one – and that’s Ratcliffe and his team not only “We wanted to get all the lenders the company, helping to transform its what keeps took their first tentative steps into the together in London and New York so we existing crackers into some of the most us hungry” automotive industry with the development could talk to them face to face,” he says. “We competitive in Europe. of its own off-road vehicle in February wanted to tell them how about our business “We also saw our Dragon Ship concept 2017, but INEOS also acquired British works and how we planned to get out of as the perfect opportunity to really dig clothing brand Belstaff a few months the downturn really quickly. Banks don’t Grangemouth out of a hole,” concedes Tom Crotty, later in October, bought a football club usually work like that but Jim insisted.” Crotty. “At that point, the union had Director of public in the Swiss league in November, and It paid off and INEOS succeeded in refused to engage in negotiations, we affairs, INEOS sponsored Sir Ben Ainslie’s America’s renegotiating all its debt to levels that were were running the cracker at half rates Cup sailing team in April 2018. better than before the downturn, he adds. because we didn’t have enough ethane, Yet despite this eclectic mix of projects, “It worked so well that we’ve done it and our pension costs had risen to 50% of it was a more traditional announcement every year since to tell all our lenders salary. We needed to see changes to make that really dominated the headlines. exactly what we’re doing. That’s meant the site viable again.” For the first time in two decades, an that since 2009, ours has been one of Fast forward to 2015 and the group entirely new cracker would be built in the most favoured pieces of debt in the was going from strength to strength – Europe – and INEOS was behind it. industry – and whenever we’ve needed and was breaking into some exciting new Ratcliffe labelled it a “game changer” – to raise money we’ve been able to do it markets too. a €2.7bn project that brings a new ethane almost instantaneously.” “The most obvious sector for us to cracker and propane dehydrogenation It also marked the start of a new era for branch into was oil and gas,” says Crotty. (PDH) plant to the region. It is, by far, INEOS - a time of renewed investment “We saw very competitive valuations the company’s single biggest capital and ambition. in the North Sea and recognised it was investment ever. There followed a hive of activity in in the same position as petrochemicals It is not the first time that INEOS has 2010 when the company really set out was 20 years ago – there were many taken the industry by surprise, and it will its stall for its future. Still reeling from ageing assets owned by companies not be the last – but it certainly makes the effects of the recession, it asked that were happy to sell. We therefore choosing a single defining moment in the for – but was refused – a one quarter looked at whether we could apply the company’s history that little bit tougher. deferral on its VAT bill. It decided to same approaches of asset care and cost In the space of 20 years, the group has relocate its headquarters from the UK to management to what are essentially flourished – never afraid to take a risk, Lausanne, Switzerland. While it remained chemical plants at sea.” break new ground or push the boundaries. committed to its UK operations, the In one of the most ambitious moves “At INEOS, we never rest on our potential tax savings from a move abroad to date, INEOS gained a foothold in laurels,” insists Crotty. “When we achieve were significant. the upstream energy industry with the a target, we always look ahead to the next In January 2011, INEOS announced purchase of the DEA UK North Sea gas one – and that’s what keeps us hungry.” a new trading and refining joint fields in 2015 to create INEOS Breagh. by Andy Brice

3 20TH ANNIVERSARY TIMELINE

Founded on 4 May after Buys Chlor Chemicals, Fluor and Silicas businesses management buyout of Purchases from ICI, as well as Dow’s ethanolomines and gas Inspec and acquisition of ICI’s acrylics treatment businesses, Degussa’s phenol business a former BP site in business and a majority stake in EVC Antwerp, Belgium

1998 Acquires Innovene from BP for $9bn, transforming INEOS into one of the world’s largest 1999 chemical companies. Buys BASF’s 2002 polystyrene business in the US 2001 First shipment of ethane from US Announces new trading and refining JV with to Europe using purpose-built PetroChina, to be called Petroineos. Forms vessels - part of a $1bn project. The Oxide, Fluor, Styrolution, a 50:50 styrenics JV with BASF Moves headquarters back to the Silicas and Phenol UK. Buys Solvay’s stake in INOVYN businesses are Restructures Innovene and forms combined to form INEOS Nitriles, INEOS Olefins, INEOS Group INEOS Olefins & Polymers USA, 2005 INEOS Oligomers, INEOS Polyolefins, INEOS Refining and Grangemouth facility restarts INEOS Technologies after strike. Agrees survival plan Acquires 51% of ABS and additional investment to business from LANXESS, ensure site’s long-term future and the polyolefins 2006 business from Borealis Successfully renegotiates financing with lenders and 2008 secures future 2007 Buys Sasol’s solvents business, along with remaining shares of Styrolution Global economic downturn triggers several banking covenants and leaves INEOS facing tough negotiations with the banks. Agrees 2010 Seal Sands, VAM, ethyl acetate and 2009 chlorvinyls purchases Makes waves in the North Moves headquarters 2011 Sea by buying assets from to Switzerland DEA Group and Fairfield 2013 Energy. Forms INOVYN JV with Solvay 2014 THE EVOLUTION 2015 Buys assets from Dong Energy to become Top 10 oil and gas company in the North Sea. Agrees to buy Forties Pipeline System and Kinneil Terminal from BP. Diversifies business with Projekt Grenadier and development of 4x4 off-road vehicle, acquires OF INEOS clothing brand Belstaff and buys Swiss football club, Lausanne 2016

Finding the right chemical formula

he past two decades have seen INEOS ever-changing regulations and environmental 2017 establish itself as one of the world’s obligations, the business has continued to break Forms INEOS TEAM UK and invests £110m to challenge Tlargest chemical companies and a new ground and seize opportunities. for the America’s Cup. Announces €2.7bn investment in significant player in the oil and gas sector – Proud to be recognised as a standard bearer Europe and region’s first new cracker in 20 years with a leadership team that is never afraid of a for manufacturing and best practice, INEOS is challenge. now embarking on a period of unprecedented Despite an increasingly competitive investment – just one of many major landmarks in marketplace, tough economic conditions, and the company’s 20-year history. 2018

4 Founded on 4 May after Buys Chlor Chemicals, Fluor and Silicas businesses management buyout of Purchases from ICI, as well as Dow’s ethanolomines and gas Inspec and acquisition of ICI’s acrylics treatment businesses, Degussa’s phenol business a former BP site in business and a majority stake in EVC Antwerp, Belgium

Buys assets from Dong Energy to become Top 10 oil and gas company in the North Sea. Agrees to buy Forties Pipeline System and Kinneil Terminal from BP. Diversifies business with Projekt Grenadier and development of 4x4 off-road vehicle, acquires clothing brand Belstaff and buys Swiss football club, Lausanne 2016

2017 Forms INEOS TEAM UK and invests £110m to challenge for the America’s Cup. Announces €2.7bn investment in Europe and region’s first new cracker in 20 years

2018

5 20TH ANNIVERSARY CHEMICALS Growing from Strength to strength

INEOS is undertaking a massive expansion programme across the business, with flexibility, security of supply and enhanced competitiveness the major drivers

NEOS has entered its third decade increase the capacity of its crackers at INEOS Oxide is pressing ahead with of business in a stronger position Grangemouth in Scotland and Rafnes several expansions. A sixth alkoxylation Ithan ever before. No stranger to in Norway. unit in Antwerp, Belgium, is due to making bold decisions, the company Despite the additional output from start up at the end of 2018, along with a has recently announced the largest these projects, Ingram says INEOS will 2,000 tonne expansion of ethylene oxide investment in its history. remain a major buyer of olefins to fulfil (EO) storage capacity at the site. Beesley In July, INEOS announced plans a sizable shortfall in European balances. says the company is also upgrading EO to spend €2.7bn to build a new “We have to invest to support our production at Lavera, France, to support petrochemical complex in Europe, “We have to derivatives business and our customers in the growing EO need in Europe. with a world-scale cracker – the first invest to support Europe. These investments enable us to Beesley’s eyes are also currently turned new cracker to be built in the region our derivatives look to the future,” he says. to the US where INEOS Oxide plans to for more than 20 years – and a propane As well as the cracker projects, INEOS build an EO and derivatives facility on dehydrogenation (PDH) unit. This business and has strong plans for the downstream the Gulf Coast. It anticipates an initial investment has only been made possible our customers businesses, which will consume the new EO capacity of 270,000 tonnes/year with because of the group’s $2bn investment in Europe. These output. INEOS Oxide CEO Graham start-up in 2022. in its Dragon ships, which has created a Beesley says the group’s growth strategy “Our USA project is a big step out proven and reliable virtual pipeline across investments is centred on building up its derivatives for INEOS Oxide and will replicate the the Atlantic to import huge quantities of enable us to look output, for which it will need upstream business model of Antwerp,” he says. shale-based ethane and LPG from the US. to the future” feedstocks such as ethylene and Beesley envisages an “EO campus”, where With regard to locations for the new propylene. “All of this helps to improve the company will invite third parties investments, Rob Ingram, CEO of INEOS our offering of derivatives to the market onto the site to construct their own Olefins & Polymers Europe, says the and to increase the value add of our derivative facilities and take EO direct company is focusing on a coastal site in company,” he says, adding that INEOS by pipeline. EO will also be for broader northwest Europe and there are a number Rob Ingram, has been putting a lot of growth into sale in the region and INEOS Oxide of different factors that will influence CEO, INEOS Olefins & derivatives that consume ethylene and will construct a number of its own EO the final choice. These include feedstock Polymers Europe propylene in particular. derivative units on the site. Several sites accessibility, the ability to connect to downstream derivatives production, including connectivity to northwest SUSTAINABILITY SUCCESS FOR VINYLS European pipeline systems, and local government support. The devil can take many July 2016 when INEOS key challenges for PVC: Both projects will be developed in forms and back in the took full control, has been controlled loop management; parallel and take four to five years to late 1990s it was polyvinyl a major driver of the PVC organochlorine emissions; build. Ingram says INEOS is aiming to chloride (PVC), according industry’s efforts to improve the sustainable use of make an announcement on site selection to Greenpeace. The NGO’s its environmental footprint. additives; sustainable energy by the fourth quarter. campaign to completely Jason Leadbitter, head of and climate stability; and Gerd Franken, chairman of INEOS phase out PVC spurred the sustainability at INOVYN, says sustainability awareness. Olefins and Polymers North, says: “These industry to come together the company has invested Leadbitter says VinylPlus world-class assets will increase INEOS’s and make a voluntary some €30m in this regard. has a target to recycle self-sufficiency in all key olefin products commitment to address VinylPlus is the latest 800,000 tonnes/year of PVC and support the growth of our derivatives some major environmental programme in place and in Europe by 2020. This and polymer businesses in Europe. All concerns. The first initiative, builds on the targets met compares with the target set our assets will benefit from our ability to Vinyl 2010, was launched in under Vinyl 2010. It is under Vinyl 2010 of 200,000 import competitive raw materials from October 2000. based on a system devised tonnes/year. According to the US and the rest of the world.” INOVYN, formerly a joint by NGO The Natural Step, Recovinyl, the recycling arm INEOS is also planning to further venture with Solvay until and has identified five of VinylPlus, nearly 640,000

6 and connections will allow the plant to are building the world’s largest single-train be highly efficient, with raw material low-viscosity PAO unit,” says Joe Walton, integration into the refinery and cracker CEO of INEOS Oligomers. Feedstock will complex, and access to the Marl harbour come from the adjacent 420,000 tonne/ inland waterway connection. year linear alpha olefin (LAO) plant, which “This is an important feedstock is also under construction and due to start investment for our European business. up in the first half of 2019. It shows a clear commitment by INEOS INEOS’s expansion programme is not to its phenol business,” says Hans Casier, “This is a really just confined to adding capacity. INEOS CEO of INEOS Phenol. “The Marl big expansion has been spreading its trading wings and Chemiepark has been selected as the of our entered the energy markets as of 5 July best location to build a state of the art, capabilities, 2018. David Thompson, CEO of INEOS world-scale cumene unit with excellent working with Trading & Shipping, says a first step was to logistics that will underpin our phenol take over the gas supply from its business Significant investment is gas from our planned in the coming years and acetone sites in Europe.” in the Western Shetlands part of the North Across the Atlantic, INEOS Olefins & fields and Sea. The company will be trading all of its Polymers USA is actively adding capacity. we will look own oil and gas business from 1 October. Following the successful start-up of its to add value “This is a really big expansion of our are being considered and confirmation joint venture high density polyethylene where other capabilities, working with gas from our of the location and technology partner is (HDPE) plant with Sasol in LaPorte, opportunities fields and we will look to add value where expected later in 2018. Texas, the company is looking to see how exist” other opportunities exist, for example in Other INEOS Oxide projects include much more it can get out of the 470,000 transportation,” says Thompson. expansions of propylene oxide (PO) tonne/year plant. “There is enough in He adds that as a large consumer of and dipropylene glycol (DPG) in the design to get a bit more capacity. We gas, the company may have opportunities Cologne, Germany, as well as significant are very confident to push that unit a bit David Thompson, to optimise its own supply and demand investment in coming years in ethylidene more,” says Mike Nagle, CEO of INEOS CEO, INEOS Trading needs, ultimately reducing the volumes it norbornene (ENB) capacity. A major Olefins & Polymers USA. & Shipping buys from third parties. debottleneck will be on stream in Nagle adds that the business is looking A new butane storage tank, which Antwerp in 2019, followed by a proposed at other PE debottleneckings but he will allow INEOS to import the gas from second worldscale ENB and C5 feedstock believes the Gemini plant presents the the US and supply its plants in Cologne, is plant at a new location to be decided. quickest and most cost-effective way of due to open in 2019 in Antwerp. It will Beesley adds that progress continues adding capacity. also provide INEOS Trading & Shipping to be made on a project to produce The company has started work on an with options to trade butane in Europe, and vinyl acetate monomer (VAM), either in ethylene expansion at Chocolate Bayou, potentially later extend supply to its site Antwerp or at Hull in the UK. Texas - due onstream in 2020. It is also in Lavera in the future. Meanwhile, plans are also underway pursuing a series of polypropylene (PP) INEOS has cogeneration units on its to build a world scale cumene plant at debottleneckings. To date, about 45,000 sites that Thompson says will yield more the Chemiepark in Marl, Germany. It is tonnes/year of PP has been added to its chances to optimise its energy purchasing. due to be completed in 2020 and access US network with another 55,000 tonnes/ He says INEOS will start looking at power existing pipeline connections between year due online in 2020. trading sometime next year. INEOS’s phenol acetone production site INEOS Oligomers is building a 120,000 In another world first, INEOS will in Gladbeck, the Evonik Chemiepark in tonne/year polyalphaolefin (PAO) plant supply US ethane from shale gas to China. Marl, and the BP refinery and cracker at Chocolate Bayou, scheduled to go The company signed a long-term supply complex in Gelsenkirchen. Its location online in the third quarter of 2019. “We agreement with China’s SP Chemicals, which includes the construction of two very large ethane carriers (VLECs). The first vessel is due for delivery in the first quarter of 2019, with the second following tonnes of PVC was recycled pyrolysis that breaks down recycling under new EU by the end of 2019. in 2017. the molecules into chemical rules that were adopted on SP Chemicals is building a cracker Although mechanical components and feedstock is 16 January 2018. in Taixing to produce 650,000 tonnes/ recycling of PVC is now very interesting and attractive Separately, INEOS is also year of ethylene with commissioning due well established, with the for the INEOS group. He looking at chemical recycling in 2019. Thompson says the agreement necessary collection and adds, however, that the in its styrene/polystyrene (PS) gives INEOS flexibility in supplying and sorting infrastructure largely challenge is “significant and business. INEOS Styrolution trading in the Far East. in place across Europe, the cannot be underestimated”. signed a memorandum of Never before has it embarked on next challenge is to develop Leadbitter says INEOS understanding in April 2018 such a number of projects to enhance chemical recycling. “The and the vinyls industry with Agilyx Corporation to its feedstock flexibility and security real Holy Grail is in chemical have shown that voluntary convert post-consumer PS of supply, and grow its downstream recycling, which is a much commitments do work and waste back into styrene business. Be in no doubt that INEOS more challenging nut to represent an opportunity feedstock. Another deal was is investing heavily to secure its crack,” says Leadbitter. “A for other polymer done in November 2017 to competitiveness for a long‐term future, high-temperature process producers that are now support Pyrowave’s North and for whatever may lie ahead. such as gasification or facing tight timescales for American PS recycling project. by Elaine Burridge

7 20TH ANNIVERSARY OIL & GAS BUSINESS LOOKS TO THE LONG TERM

Ambitious expansion and exploration plans have given INEOS Oil & Gas every reason to be optimistic for the future

each to focus on its core activities. The businesses are INEOS Oil & Gas Denmark; INEOS Oil & Gas Norway; INEOS Oil & Gas UK, which consists of the Breagh assets and those mainly in the West of Shetlands acquired from DONG Energy; INEOS FPS; INEOS Shale; and INEOS Upstream Services. In parallel with acquiring and creating new businesses, INEOS Oil & Gas has continued its exploration and development activities. Tuft says the company has drilled four new wells in the Breagh gas field, which is located in the southern part of the North Sea, growing production there by more than 30%. A large project is also underway to reroute gas exports from the Clipper South field in the North Sea into the Bacton terminal for Shell. The new route is due to go into operation by the end of 2018. INEOS was forced to find a new export route for the gas following ConocoPhillips’ decision to close the Theddlethorpe Gas Terminal by the end of 2018. INEOS Oil & Gas also did another INEOS has established itself as a leading player in the oil and gas sector deal last year to farm into some acreage in the West of Shetlands with Siccar Point Energy to tap into a prospect called Lyon, which Tuft says has the potential NEOS is making huge strides with As if the size of the acquired assets to unlock that entire area. INEOS has its oil and gas business, which was was not enough to digest, the company positions in four fields that make up Iboosted last year with two major had to deal with a crack in the FPS after the Lyon cluster: Lyon; Tobermory; acquisitions, notably DONG Energy just a few weeks of ownership, which Bunnehaven; and Cragganmore. Initial and the Forties Pipeline System (FPS). presented an unexpected challenge. Geir survey work indicates that the cluster The DONG deal has turned INEOS Tuft, CEO of INEOS Oil & Gas, says that has extensive gas reserves of between Oil & Gas into the biggest private with hindsight, it cemented the oil and 3-5tcf of gas. This, says Tuft, would match enterprise operating in the North Sea gas world’s view of the company as a very major gas fields such as Elgin Franklin, and taken the UK-headquartered group capable operator of very complicated “We have great Britannia and Laggan Tormore. from a producer of 20,000 barrels of oil kit. “It was a challenging start but hopes for growth “We have great hopes for growth equivalent per day (boepd) to 100,000 FPS got a lot of praise from regulators and long-term and long-term opportunities,” says Tuft. boepd (2016). and customers on how it handled the opportunities” “Further gas is very near to coming on The number of fields has grown disruption and communicated with stream in the new Breagh wells and, significantly, with around 570m boe of stakeholders,” he says. within a couple of months, in the Clipper commercial and potential oil and gas Following the acquisitions, INEOS Oil South fields, which gives us more long- reserves across the Danish, Norwegian & Gas designed and implemented a new Geir Tuft, term potential. Northwest Shetland could and UK Continental Shelves that are ripe corporate structure, which split the group CEO, INEOS also prove to be a prolific gas area as well for development. into six separate businesses, allowing Oil & Gas as other parts of the West Shetlands.”

8 The company is making progress in Norway and Denmark. Having gained PLENTY MORE IN THE PIPELINE licences in Norway in 2017, INEOS Oil & Gas is now bidding on a handful The acquisition of the Forties Pipeline optimistic about the future for FPS. He of new licences in the 2018 round. System (FPS) is a good illustration of says: “FPS is a really good business. We “Norway is an interesting area for us what INEOS is all about – taking unloved want to reduce the rate of decline in the and there are opportunities that we can assets and turning them into a bigger North Sea from about 10% to 3-4% and progress in acreage and potential other and better business. put money back into FPS and revive the acquisitions,” Tuft says. The move gives INEOS the last piece of assets. We have a very active commercial He adds that the company has also the Grangemouth puzzle. Having bought team chasing every molecule of business been looking at the opportunities offered the refinery and chemical plant from BP to 2040 and beyond.” in Denmark by the former DONG assets. in 2005, the purchase of FPS reunites the Gardner adds that INEOS wants to make The Siri field is coming to the end of its life Grangemouth assets. “We are putting the the UK oil and gas sector healthy again and INEOS is considering options to see synergy at Grangemouth back together and use the time and positive cash flows if it could get a few more years out of the again,” says Andrew Gardner, CEO of so that 10 years ahead, the company can asset. Tuft says another five years would INEOS FPS. offer a “very attractive proposition” for bring considerable value to both INEOS BP built the 235-mile pipeline system the remaining oil and gas based on low and to Denmark, but the situation is as a means of transporting gas and transportation costs. complicated by the fact that Siri is a chalk crude oil from the Forties oilfield, which The company is now starting field, which means it is more difficult and began operating in 1975. The network detailed engineering studies to expensive to extract the oil. However, Tuft runs from the Forties Charlie platform determine the best way forward for says it is easier to take these opportunities through the Unity riser platform to investment. Gardner expects INEOS now that oil prices have lifted to $70-75/ the terminal at Cruden Bay, and on to FPS will probably have to spend around bbl, than when oil was at $40-45/bbl. The Kinneil, Grangemouth. Gardner says $300m-400m in plant and equipment Brent crude oil price was hovering around there are currently some 85 different oil over the next three to four years. $72/bbl in mid-August. rigs attached to FPS, which at its peak As well as putting money back into INEOS Oil & Gas has also been processes 1.1m bbl/day. the main assets, Gardner says INEOS working to take cost out of the Danish Having sold the is also working operations and has reduced manning Forties field to with employees to more appropriate levels with Apache in 2003, “We are putting the and contractors to Denmark no longer being a corporate BP kept FPS until synergy at Grangemouth improve the overall headquarters as well as an operating April 2017, when back together again” condition of the unit. DONG had previously been the energy giant site. The company operating a global business out of the agreed a sale is currently focused Copenhagen headquarters. to INEOS. The Andrew Gardner, on a programme Turning to the UK and shale, Tuft deal gave INEOS CEO, INEOS FPS that it calls asset says the company concluded its biggest ownership and care, or Ascare: this seismic survey ever in the country last operation of FPS, improves structural year. The survey of more than 250km2 the Kinneil terminal and gas processing integrity; operational procedures; and was conducted in the East Midlands area plant, the Dalmeny site and Hound housekeeping. In order to show the to provide data on the underground rock Point terminal, sites at Aberdeen, the importance of Ascare, the company also structure for future drilling. Forties Unity Platform and associated makes this a condition of the staff bonus While noting that attitudes in the infrastructure, and made it responsible for scheme. UK to shale and unconventional delivering almost 40% of the UK’s North Gardner says INEOS FPS is investing gas are “complicated”, Tuft says that Sea oil and gas. About half of the gas in $5m this year to improve AsCare. The operating in the local environment the FPS system is used as a feedstock in first phase of the programme is to works reasonably well as long as you are the KG cracker at Grangemouth. improve housekeeping. “Our operations respectful and have a sensible dialogue INEOS took over the business at the end teams have taken the initiative and are with the community. He explains that, of October 2017. Gardner says the assets improving the site condition every day. as yet, INEOS has not been fracking were in a mixed condition and some In addition, every Friday our office staff but is trying to drill for core samples. areas require significant investment. He and our engineering contractor partners “There is a fantastic opportunity in the explains that BP believed the assets would take part in housekeeping events to tidy UK but until we have drilled a few wells, probably need to shut down in 2029-2030 up the site. We have removed about 100 it is difficult to see whether fracking is because of shrinking oil volumes from the skips of material and rubbish so far. We economically feasible,” says Tuft, who North Sea. are putting pride in the site back in place,” adds that the company is talking to local But, INEOS thinks otherwise. Gardner comments Gardner. authorities to try and make the current says that FPS will remain open until at INEOS FPS is also growing the number of lengthy planning process more efficient. least 2040. INEOS is actively sharing staff. Gardner notes that when INEOS took Tuft is full of enthusiasm and this view with customers so that they control of FPS, it employed about 300 staff optimism for the future - not surprising can continue to invest in their fields and but also relied on another 150 contractors given that INEOS has grown into a choose FPS as their route to shore. or agency staff every day. The company is substantial onshore and offshore oil and While it is true that the North Sea is bringing people into the business to reduce gas business in little more than two years. on a declining curve, Gardner is very the dependence on outsourcing. by Elaine Burridge

9 20TH ANNIVERSARY VENTURES CHALLENGERS FOR THE AMERICA’S CUP

Trying to win one of the world’s most competitive yacht races is a little outside the usual remit of a leading chemical company – yet INEOS is never one to shy away from a challenge

ver the next three years, the INEOS too. They have a great network company has pledged £110m to of contacts, manufacturing and Osupport an attempt to win the mechanical engineering knowledge America’s Cup, one of the few sports as well as high-tech materials. That titles never to be held by a British team relationship has been great and is still – particularly galling given Britain evolving.” helped form the event 167 years ago. INEOS’s experience with Projekt Dating back to 1851, it is one of the Grenadier, the development of a new oldest continuous sporting events in uncompromising 4x4 off road vehicle, the world – and certainly one of the has been a particular boon, adds Ainslie. most hotly-contested. “In many ways, it relates quite The newly-named INEOS TEAM heavily to the systems we’ll be using UK, representing the Royal Yacht on the America’s Cup boat,” he says. Squadron Racing, and skippered by the “With the efficiency savings required, world’s most decorated Olympic sailor, advanced control systems, sensors and Sir Ben Ainslie, will be challenging for valves, there are a lot of parallels with the 36th America's Cup in 2021. They developing a new car.”

join two other teams vying for the © HarryKH/INEOS TEAM UK A 28ft prototype has already been right to face the current title holders, INEOS TEAM UK founder, Jim Ratcliffe (right) with built and despite still being very early in Emirates Team New Zealand, and team principal and skipper, Sir Ben Ainslie the design process, and a fraction of the win the coveted trophy, affectionately size of the final vessel, it is providing known as the Auld Mug. some valuable insight and experience Introduced by a mutual friend, unique vessel, forming a team of top designers and sailors, for the team. INEOS chairman Jim Ratcliffe and and helping with the significant logistical costs in shipping INEOS TEAM UK currently has Ainslie soon discovered their shared everything to New Zealand where the event will take place. 75 people working on the project and passion for adventure and putting True to form, INEOS will again be breaking new ground the crew has already gained some race Britain back on the map. in the competition as it requires an entirely new type of boat. experience by competing in regattas. In “Jim and I started talking about the The AC75 Class is a monohull yacht fitted with foils – huge August they won the GC32 Racing Tour’s challenges of the new boat, our strategy manoeuvrable legs not only offering stability at high speeds 37 Copa del Rey in Palma on the Spanish and about creating a winning team - but helping counterbalance the boats to prevent capsizing. island of Mallorca, and are participating and he very quickly said he’d like to “We’ve never seen a monohull this big that is able to foil – in another event in Sardinia as we go to help. Thanks to Jim’s enthusiasm and it’s really pushing the limits,” points out Grant Simmer, INEOS press in September. his desire to see Britain lift the Cup, TEAM UK’s CEO and four-time winner of the America’s Cup. “We’re now a second-generation INEOS is now playing a major part,” “The competition is fairly similar to Formula 1 as it’s a sporting team and learned a huge amount says Ainslie, INEOS TEAM UK’s team event that relies a lot on technology. The boat we’re competing in the last campaign,” says Ainslie. principal and skipper – and member of in is a completely new concept so requires a lot of technical “We’ve finetuned the team and got the the 2013 America’s Cup winning team. development and a great team behind it. We’re building backing of Jim and INEOS, so have the “We really want to capitalise on all possibly one of the most high-tech vessels ever.” firepower. It’s now down to us to get the that experience. You can learn a lot Work on the blueprints for the new boat started in March strategy right and if we can do that, we from an organisation that has been and since INEOS has come onboard, the team has been have a fantastic opportunity. We really as successful as INEOS. Sailing is all able to capitalise on a huge pool of skills and manufacturing want to do well for one another and about efficiency, attention to detail, experience. The team are in constant contact with INEOS, desperately want it to be a success - for determination and our focus as a team and regularly share updates on the progress of the project. the team, for INEOS and for Britain. I – very similar principles to business.” “Clearly, we’re now being funded at a level where we think it would be a major moment in The funding will primarily be spent can be most competitive but we’re also getting a lot of our sporting history.” on the design and manufacture of this management advice, commitment and support from by Andy Brice

10 Auto project steps up a gear

Cruiser that the wartime Jeep inspired – vehicle’s credibility – and the success of Projekt Grenadier has a distinct style and the project – depends on this versatility. identity all of its own.” It will be a tool – that is also cool – with a Underneath the skin, a test vehicle focus on function rather than frippery.” Full speed ahead for auto project – a chassis and suspension mule – has Tennant notes that the regulatory and already been put through its paces in legislative environment is very different on- and off-road conditions, and come to that into which earlier 4x4s were through with flying colours. “With the born so every possible avenue regarding ith INEOS’s new 4x4 off-road mule, we were able to experience the efficiency, fuel economy, light weighting vehicle expected to roll off chassis and suspension set-up that we and safety is being explored. Wthe production line in late have developed for our vehicle. Let’s just There is still plenty of work to be done 2020, it is no surprise that the project say that after some robust testing, where – including agreeing on a name for the has been accelerating at pace since its the mule was pitched against our main new vehicle. INEOS is inviting suggestions announcement early last year. competitors in the market, there were through its website and has already accrued “There are so many moving parts some broad smiles on the faces of the around 4,000 responses. For now, at least, to this project,” says Mark Tennant, project team,” adds Tennant. it will continue to be known as Projekt commercial director of INEOS “We’re not going INEOS has high hopes for its 4x4 and Grenadier – a nod to the Grenadier pub Automotive, “but the INEOS ‘can do’ to be doing plans to produce around 25,000 vehicles just a stone’s throw from INEOS’s London attitude is working really well – we’re things the each year, at a starting price in the region headquarters where the idea was born. getting things done fast.” conventional, of £35,000. Diesel, petrol and possibly an The search also continues for a MBtech, a former subsidiary of automotive way alternative fuel version are planned. Europe production facility and several suitable Mercedes Benz, was appointed as – we want to and the US are important markets, but so sites have now been shortlisted, with a Projekt Grenadier’s engineering partner be different” too are sub-Saharan Africa and Australia. decision expected later this year. at the beginning of the year, bringing “Today, there are plenty of Where appropriate, the team intends a 200-strong team and many years of homogenised SUVs but there’s very little to leverage technologies, expertise and experience with leading automotive on the market that could be called a knowhow from elsewhere in the business manufacturers. Early design concepts Mark Tennant, genuine utility vehicle - and that’s where too, he adds. “INEOS is a very significant have made the journey from the Commercial director, the opportunity lies,” says Tennant. supplier of commodities, components computer screen, to 1/3 scale models, and INEOS Automotive “We want the Grenadier to be as and composites to the automotive now to a full-size clay version. versatile – as usable – as possible,” he says. industry, so we’re looking to capitalise on “As the design has become more “First and foremost, it is being designed our expertise in those areas. refined, the character of the vehicle is to do a job of work. For the farmer “We like the fact that we’re coming really coming through strongly,” says moving equipment, livestock or feed into the automotive industry completely Tennant. “The devil really is in the detail around the farm; for the outdoor sports fresh but with a wealth of manufacturing of the design process. While we have enthusiast, loading up the surfboards, and engineering experience. We’re not consciously referenced the original 4x4 the skis or the climbing equipment; for going to be doing things the conventional, pioneers – the first Willys Jeep, and towing the horsebox, or RIB; for the automotive way – we want to be different.” the Series I Land Rover and early Land camping trip, or the school run. The by Andy Brice

FITNESS CAMPAIGNS ARE UP AND RUNNING

Childhood obesity remains one the Both aim to promote a healthy previous year. biggest threats to the wellbeing of lifestyle to children and encourage The business has also sponsored The young people – so much so that the regular exercise. INEOS chairman Daily Mile (www.thedailymile.co.uk) World Health Organisation has called Jim Ratcliffe launched Go Run For - a programme that encourages primary it one of the biggest public health Fun (www.gorunforfun.com) a few schools to get pupils active by taking challenges of the 21st century. years ago and the events now take them for a 15-minute jog or run – place worldwide, drawing more than making them fitter, healthier and more In a bid to keep children active and 260,000 eager participants. The most able to concentrate in the classroom. healthy, INEOS has given its backing to recent race in Italy this June had more With INEOS’s backing, founder Elaine several fitness initiatives: Go Run For than 2,400 children aged 5-10 taking Wyllie is well on the way to getting every Fun and The Daily Mile campaign. part – over three times the turnout the school involved.

11 Founded in 1998, UK-headquartered INEOS has grown to become one of the world’s largest chemical companies. It comprises 34 businesses, employs 20,000 people globally and achieved sales in excess of $60bn in 2017. The vertcally- integrated chemicals producer has 171 manufacturing sites in 24 countries, and boasts a diversified portolio serving the petrochemicals and oil & gas markets.

INEOS Group Headquarters 38 Hans Crescent Knightsbridge London SW1X 0LZ UK

www.ineos.com @INEOS