The Grangemouth chemical plant in Scotland may go from huge losses to instant profitability thanks to the saving plan drawn up by Swiss-based international operator Ineos Group Ltd.
The company has announced plans to invest £300 million in the Grangemouth site, which is estimated to have lost about £600 million over the past four years. After considering taking radical measures and closing down the plant, Ineos appears to have had a change of heart and decided to take a very different route.
By the end of 2016, the company is predicted to have constructed new shipping and storage terminal that will handle ethane imported from the United States. According to the Daily Telegraph, Ineos has signed a 15-year agreement with U.S. Range Resources for supply of American ethane, which is up to 75 percent cheaper than ethane sourced from elsewhere. Cheap ethane deliveries will make it possible for the Grangemouth chemical cracker to work at full capacity of 700,000 tonnes a year -- double the current rate.
Calum MacLean, chairman of Ineos' Grangemouth facility, commented that the deal will make it possible for the plant to manufacture competitive products and is the only possible solution to turn Grangemouth from a loss-making enterprise into a profitable business. Even if shipping costs are factored in, the ethane from the United States will still be about 50 percent cheaper than that coming from the North Sea, MacLean said.