Cover story Versalis enters next phase of growth Eyeing cumene plant in Italy, global petchem investments with Eni

↘Natasha Alperowicz joint venture (JV) with Lotte Group (Seoul) in styrenics, and elastomers. It is also increasingly South Korea—Versalis’s first manufacturing active in renewables, with several projects on the ersalis (Milan, Italy), the wholly- complex outside Europe. horizon. However, most of its revenue—about owned chemical subsidiary of Eni In 2011, Versalis’s predecessor company, 90% in 2016—is in Europe. Ferrari says that the V (Rome), is entering a new phase of Polimeri Europa, announced a program to newly completed elastomers JV with Lotte in growth after drastic restructuring in Italy and “right-size” its operations, and in 2012 it South Korea will help Versalis to meet a target of the commissioning of a major elastomers changed its name to Versalis. Daniele Ferrari, deriving 30% of its revenue from outside Europe CEO throughout this period, presided over the by 2022, the end of the company’s current transformation, which saw the company four-year plan. The target includes exports from rebound from years of heavy losses to a profit existing operations as well as a proposed second in 2015, a year ahead of schedule. And 2017 phase of the South Korean JV. was the third consecutive year in which Versalis and Lotte inaugurated Lotte Versalis Versalis achieved a significant rise in adjusted Elastomers, an equally owned JV, at Yeosu in November 2017. The complex is designed to produce 200,000 metric tons/year of elasto- Versalis will continue its mers, including 100,000 metric tons/year of transformation with partners ethylene-propylene-diene monomer (EPDM) and 100,000 metric tons/year of solution- and with parent Eni. styrene butadiene rubber (SBR). The JV, which Daniele Ferrari, CEO, Versalis is based on Versalis technology, targets Asia’s tires, automotive applications, and technical goods markets. Lotte provides the complex operating profit (EBIT). with back-integration to petchem building A major landmark in Versalis’s recent block raw materials, as well as utilities and history was the decision in 2016 by energy infrastructure facilities. “This achievement is group Eni not to divest the company, an important milestone in Versalis’s interna- which had been on the block for some tional development strategy, which leverages time. Eni’s about-face, which came after valuable proprietary technologies and talks with private equity group SK strengthens our leading position in the global Capital Partners collapsed, was formally elastomers market,” Ferrari says. confirmed when Versalis was declared a The proposed second phase of investment “not-for-sale” asset in the Eni accounts. at Yeosu, which Versalis and Lotte are Eni, together with other international discussing, includes a project to add 50,000 energy groups, is now eyeing worldwide metric tons/year of styrene-isoprene-styrene investments in integrated petrochemical and styrene-butadiene-styrene capacity. A projects to extract the maximum value final investment decision will be made in the from hydrocarbons in the current next few months, Ferrari says. subdued oil price environment. Versalis However, it is the big project in Algeria—a is expected to play a major role in this proposed massive integrated petchem complex strategy, with one major project being with Eni and Algerian state energy group studied in Algeria and others in the Sonatrach (Algiers)—that is attracting the pipeline. most attention. “We are continuing with a Ferrari, in an exclusive interview with feasibility study to build a petrochemicals CW, confirmed recently that Versalis complex in Algeria in partnership with would continue its transformation in Sonatrach,” Ferrari says. “This would be a fully partnership with international petchem integrated Eni project, so we are talking about players and also with Eni in large integrated oil and gas, refining, and petrochemicals, with projects. “Versalis is a company with an Italian most of the petrochemical technologies soul but a global vision,” Ferrari said. supplied by Versalis.” The complex would be With 2016 revenue of €4.2 billion ($5.0 centered on a world-scale steam cracker, based billion), Versalis is a significant international mainly on LPG and ethane. player in intermediates, polyethylene (PE), Versalis has also signed an agreement with

22 | Chemical Week | 29 January/5 February 2018 chemweek.com Cover story

Mazrui Energy Services (Abu Dhabi) to three undisclosed companies. The product is develop an oilfield chemicals production base sold to Asian customers. These contracts, in Abu Dhabi. Versalis makes a full range of signed in 2015–16, have duration of between oilfield chemicals at its Mantua, Italy, three and five years. The rest is consumed complex—a business that Ferrari says was internally. Ferrari says that Versalis will developed in record time. Mazrui is “blending review the situation when the contracts our chemicals and preparing tailor-made expire, and may invest in new ethylene-con- formulations that are needed in the Middle suming projects at Porto Marghera or Priolo. East. We will offer an integrated portfolio for If the PE market remains favorable, Versalis drilling, production, and enhanced oil could even build new capacity at Priolo, recovery,” he says. Some of the chemicals will where it ceased PE production almost five come from Italy and some will be sourced years ago, he says. locally, he adds. The large Porto Marghera complex, with an Other international initiatives include the ethylene capacity of 490,000 metric tons/ development of green tires with the Mesnac year, is integrated with several other Group, a China-based rubber and tire manufacturing operations in northern Italy, machinery company, together with Mesnac’s NEW KID ON THE BLOCK: Just-completed elastomers JV at in a network that Ferrari calls Versalis’s small Yeosu, Versalis’s first complex outside Europe. local affiliates Ecombine and EVE Rubber Verbund [full integration]. Pipeline and barge Institute. The aim is to develop technology connections link the complex with Versalis’s and produce a new range of tire elastomers Ravenna, Ferrara, and Mantua sites. At with improved mechanical performance and Ferrara, Versalis will complete an EPDM lower environmental impact. Versalis expansion at the end of the first quarter, currently markets emulsion SBR in China adding 50,000 metric tons/year of capacity from Reliance Industries’ 140,000-metric and revamping the existing complex, which tons/year plant at Hazira, India, which is will increase the site’s EPDM capacity to based on Versalis technology. 150,000 metric tons/year. Versalis has also expressed interest in the past Porto Marghera was saved from permanent in producing elastomers in the United States, closure in 2015 by a number of outages at and Ferrari says it is still looking for potential several ethylene plants elsewhere in Europe. partners. The company established a new The Porto Marghera complex is now undergo- trading company in 2016, Versalis Americas ing a transformation, which includes (Houston, Texas), to reinforce its presence in BIG ACHIEVEMENT: Inauguration of a world-scale synthetic optimizing its plants and infrastructure, to rubber and elastomers complex, with more to come. the United States, notably in the elastomers make it more sustainable in the medium- and market. A partnership in styrenics could also be 300,000-metric tons/year plant at Lukoil’s long term. About €23 million was invested in a possibility, Ferrari says. (Moscow) ISAB refinery at Priolo, which Porto Marghera’s cracker and aromatics units Versalis is not neglecting its operations in Lukoil has put up for sale. “We want to have during a turnaround in September-October Europe, however. “We are primarily a our own cumene feedstock, and the project 2017. A separate €50-million project to European business, and in order to survive in confirms our commitment to the phenol- replace two of the site’s boilers is under way, Europe, we need to be more efficient and acetone chain,” Ferrari says. The new unit with the entire overhaul aimed at increasing differentiated, and in our existing businesses would enable Versalis to increase phenol the complex’s efficiency and integration. we need to specialize more and more,” Ferrari production at Mantua, the only site where it However, the collapse in oil prices in 2014 says. After years of relative inactivity, makes the product, by 30%. The company led to a major project at Versalis’s Dunkirk, Western Europe is undergoing something of declines to reveal its current phenol capacity. France, site being put on hold. The company an investment renaissance, based on the Versalis’s three major petchem complexes— was considering converting the complex’s renewed global competitiveness of oil-based at Priolo, Sicily; Porto Torres, Sardinia; and ethylene plant to consume ethane imported petchem operations. Several companies have Porto Marghera, near Venice—were its biggest from the United States, but shelved the announced investments in downstream money-losers until 2012. All three have project during the oil price rout. “We have the projects, as well as propane dehydrogenation undergone major restructuring. At Priolo, engineering ready for conversion, but we are plants, to take advantage of lower feedstock Versalis slashed ethylene capacity from not doing this in the current economic costs and the improved market environment. 790,000 metric tons/year to 490,000 metric climate. Should the situation change in the Ferrari tells CW that Versalis is planning to tons/year and discontinued PE production. future, we will be ready to convert,” Ferrari build a world-scale cumene plant in Italy. The company is now taking advantage of its says. Dunkirk is a fully-integrated site based “This project will be at Priolo and it will feed surplus ethylene capacity, mainly at Porto on naphtha and LPG that consumes all of its our phenol-acetone complex at Mantua,” he Marghera, and renewed global competitive- ethylene output internally. Its cracker also says. The plant will be designed to produce ness to supply international markets. About produces valuable C4 and C6 fractions. The about 400,000 metric tons/year of cumene one-third of the ethylene produced by most recent project at the complex was the and use proprietary technology. Versalis Versalis at Porto Marghera, Brindisi, and addition of a 220,000-metric ton/year plant currently sources cumene from a Priolo is sold under separate contracts with for low-density polyethylene-ethylene vinyl chemweek.com 29 January/5 February 2018 | Chemical Week | 23 Cover story

acetate copolymers in 2011. A KEY EXPORTER OF ETHYLENE: The Porto As part of its restructuring, Versalis has also Marghera steam cracker supplies clients in Asia. made major inroads into green chemistry. In 2011, it formed Matrìca, an equally owned JV with Novamont (Novara, Italy), a producer of biodegradable plastics. Matrìca uses vegetable oils to produce monomers and intermediates, including azelaic and pelargonic acids, at Porto Torres, a former Versalis petchem site that made ethylene, aromatics, and PE. Matrìca’s nameplate capacity is 70,000 metric tons/year. Its products are being qualified by customers for use in bioplastics, biolubricants, personal- care applications, detergent additives, and other products. Ferrari says that Versalis and Novamont are evaluating the next phase of Matrica’s capacity expansion. Matrìca scored a major success recently when the crop protection producer Belchim (Londerzeel, Belgium) approved the use of RESTRUCTURED SITE: Priolo is likely to see more Matrica’s pelargonic acid as a substitute for investments, including cumene and possibly a return to polyethylene production. glyphosate, the world’s most widely used agricultural chemical. Glyphosate, a nonselec- tive herbicide, is under scrutiny throughout the world for what critics claim are its toxic and carcinogenic effects. Separately, Versalis and biobased chemical firm Genomatica (San Diego, California) have been collaborating in a technology partner- ship, owned 80% by Versalis and 20% by Genomatica, to produce biobutadiene from sugars. The process is being tested on a pilot plant at Genomatica’s San Diego facility. “We have also tested this biomonomer for downstream polymerization, proving its suitability to produce high-performance, first-in-kind biobutadiene-based polymers,” Ferrari says. of the industrial trial, we will use the Ferrari says. Versalis is looking for partners to Another major focus for Versalis is the eco-pallets for the transportation of polyeth- build a demonstration plant, he says. circular economy. “We have established a ylene, particularly for pharma applications, at Versalis is also planning to use guayule, a dedicated circular-economy team to monitor the Brindisi (Italy) site,” Ferrari says. The renewable industrial crop, to produce natural initiatives in the field of environmental company is also developing a process for rubber and terpene resins. Versalis has since 2013 sustainability, identify impacts and opportu- chemical recycling of polystyrene, but Ferrari been growing the desert shrub on experimental nities, and coordinate and promote targeted says it is too early to give details. “In other fields in southern Italy, testing different climatic actions to contribute to the objectives of technologies, we are evaluating chemical conditions to ensure sustainable local cultiva- circularity and resource efficiency,” Ferrari recycling of rubber from tires. These initia- tion. It is focused on several technologies, says. Versalis has defined four pillars, strictly tives could be implemented at Matrìca, in including water and solvent extraction of the connected to innovation, that should be addition to the expansion of the existing guayule plant to target different rubber qualities considered while exploring how to further units,” he adds. for different applications, and to exploit the improve the circularity of chemicals and Versalis performed well in 2017. The company value of residual bagasse with proprietary plastics—life-cycle perspective, feedstock recorded sales in the first nine months of €3.7 saccharification technology. “In parallel, we are diversification, product innovation and billion and adjusted EBIT of €423 million. It working to develop and assess where guayule eco-design, and polymer recycling. expects 2017 to be much better than 2016, with products—natural rubber, resins, and micro- The company is developing projects under record full-year results. Sales and earnings will nized residual bagasse—can give considerable all of these initiatives. “For example, we are be disclosed as part of the Eni 2017 financial advantages compared to traditional products, for promoting an eco-pallet project, with the aim statement on 16 February. “2017 is the third example in medical applications thanks to its to produce and use pallets made of recycled year in a row that we have been profitable on a hypoallergenic properties, development of green heterogeneous plastic material from cash basis as well, and with that cash we are tires, resins for wood protection, adhesives, etc,” industrial scrap of paper mills. In the first step financing our own investments,” Ferrari says. ■

24 | Chemical Week | 29 January/5 February 2018 chemweek.com