4. 4
INEOS Background
2009 Sales $28.6bn
15,000 employees*
4,500 employee shareholders
60 manufacturing sites worldwide*
40 million tonnes of chemicals capacity
20 million tonnes of refinery products (400,000 bbls/day)
A leading global chemical company
• Largest refinery in Southern France
• Largest refinery in Northern Britain
• Largest Olefin producer in Europe
* excl. joint ventures
5. 5
Global Chemical Companies (Top 20)
12.4
12.6
12.8
13.1
14.0
15.3
16.7
19.5
19.9
20.5
23.0
24.5
25.4
25.9
26.8
28.6
31.3
44.9
54.8
19.3
Toray Ind.
LG Chem
Mitsui Chem
Sumitomo Chem
Evonik
Air Liquide
Mitsubishi Chem
Akzo-Nobel
Bayer
LyondellBasell
Total
SABIC
Shell
Formosa Plastics
DuPont
Exxon
INEOS
Sinopec
DOW
BASF
Sales in 2009 (US$ bn)
Source: Chemical & Engineering News
6. 6
Manufacturing Locations
60 Manufacturing Sites in 13 Countries
South Houston
4.1 mtes
North America
16 sites: 8.4 mtes
Mobile
0.8 mtes
Asia
7 sites: 0.3 mtes
Grangemouth
11.9 mtes
Runcorn
4.0 mtes
Antwerp
2.4 mtes
Lavéra
11.0 mtes
Wilhelmshaven
1.0 mtes
Ruhr
1.4 mtes
Europe
37 sites: 48.3 mtes
Köln
5.5 mtes
Rafnes
2.3 mtes
8. 8
INEOS Total Power Consumption
50 million MWh of Energy
A mixture of electricity, steam & gas
9. 9
INEOS ChlorVinyls – Our Major UK Power User
Second largest chlorine plant in
Europe
Competitive on-site power station
and world scale chemical plants
Only UK chlorine producer
Critical supplier to the UK chemical
industry
Completed £400m investment
programme at Runcorn in 2006
Chlorine & PVC.
Acquired from ICI in 2001. Based at Runcorn, Cheshire
10. 10
Our Energy Position in Runcorn
Electricity is a raw material
Power consumption at Runcorn site is the same as the city of Liverpool
We purchase gas, which is toll converted through a highly efficient CCGT
station on-site
Energy is 80% of the cost of making our products
We compete with all other major European producers of PVC
Totally dependent on competitive UK gas prices
11. 11
Wholesale Gas Price Differentials 2002-2007
Source: P Heren – European Gas Markets/EIUG
Wholesale Forward Gas Price (pence/therm)
15
20
25
30
35
40
45
50
55
60
65 Jan-02
Apr-02
Jul-02
Oct-02
Jan-03
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
P/Therm
UK
Continental
Europe
12. 12
Other Issues Impacting Energy Competitiveness
Multiple policy instruments creating a cumulative burden
All stick & no carrot & overly complex
EUETS
Climate Change Levy
Carbon Reduction Commitment
Renewables Obligation
Renewable Heat Incentive
UK offers limited exemptions compared to other EU States
Energy intensive industry cannot afford to lose current exemptions
Energy intensive industry must be exempt from new energy taxes
Future changes to CCL must retain exemption for electrolysis
The best result for CO2 emissions is to manufacture energy
intensive products in low carbon economies
PVC production in China results in 5 times the CO2 emissions of
European production (IFEU Dec 2008)
14. 14
A full move to renewables?
INEOS demand is 50 million MWh
To source that CO2 free via…
Biodiesel – would require an oilseed rape acreage the size of
Switzerland
Wind – would require a wind farm larger than Luxembourg
Nuclear – would require 4 new nuclear stations
16. 16
New Nuclear
Runcorn electrolysis provides an ideal baseload demand
Steady offtake 365 days per year
‘Exeltium’ model in France works well
Investment by energy intensive industry in a ‘virtual’
nuclear plant, delivering power now
CO2 free, low cost, predictable energy source
Cash from consortium allows EdF to invest in next
generation reactors
Done without infringing EU state aid rules
17. 17
Runcorn Energy from Waste
A very significant energy from waste investment
£400m project covers 25% of Runcorn’s energy
No other renewable technologies can deliver energy at
sustainable cost today
18. 18
Runcorn Energy From Waste Project
Why Runcorn?
• Good location
– Central within region
– Transport links
– Brown field site
– Next to Runcorn Site
• CHP benefits
• Ineos benefits
– Source of energy not reliant on natural gas
19. 19
Runcorn CHP Energy from Waste Facility
Phase 1
• Financial close 2009 – PFI-funded
• Operation late 2012 / early 2013
• 425,000 tonnes of refuse derived fuel per annum
Phase 2
• Contracts agreed 2010 – merchant facility
• Operation 2014
• 425,000 tonnes of refuse derived fuel per annum
20. 20
Opportunities
Electricity at less than market price
Funding via PFI lenders
Government CHP incentives
Well-located brownfield land
Merseyside
Greater
Manchester
Runcorn
22. 22
Conclusions
Need to diversify energy base away from gas dependency
Energy source needs to be cost competitive and reliable
Two primary options are nuclear and EfW
France provides an excellent model for new nuclear
EfW provides an excellent CHP option for those who need
both heat and power
All investments are long term and require a stable planning &
regulatory framework from government to allow us to
develop leadership in green manufacturing technologies
Editor's Notes
Notes
The UK Gas Forward market is no longer competitive with Europe
The European Gas Price shown includes all the “oil” effects – it is actually competing fuels that European gas is priced against – and these are Heavy Fuel Oil (70%) and Gas Oil (30%) – HFO has not increased in price in dollars over a 2 year period
3. UK Industry – and particularly Energy Intensive Industries – require competitive energy – we compete in European markets and we cannot pass price increases on to customers
4. In order to manage risk, we need to be able to purchase our energy in the forward markets. We sell a proportion of our products ahead at agreed prices and need the ability to do the same with our input costs.