BASELL: Maintaining focus

16 June 2006

There are few household names in polyolefins and petrochemicals; marketing these industries to the mass consumer has never been the industry's priority. Basell, however, is a name in polyolefins that is increasingly recognised around the world. It is the world's largest producer of polypropylene (PP) and one of the leading suppliers of polyethylene (PE) and advanced polyolefins.

Basell was formed in 2000 when BASF and the Royal Dutch/Shell Group merged their polyolefins businesses to form an independent company. Six years and a change of ownership later, and Basell has cemented its reputation as not only a major polyolefins producer, but also as a leading technology and catalyst provider with strong marketing expertise.

Today, it employs more than 6,500 people, with an annual turnover of Eur 8,500 million ($10,700 million), and has manufacturing operations, including joint ventures, in 21 countries. With close to 200 process licences sold worldwide, it has technologies ranging from Spheripol and Spherizone for PP, and Lupotech T, Hostalen and Spherilene for PE.

Basell's business strategy is very much focused on the Middle East and the Gulf region in particular. Together with Tasnee Petrochemicals, Basell already has a successful joint venture, Saudi Petrochemical Company, which operates a propane dehydrogenation (PDH) and PP plant in Jubail. It is also teaming up with Saudi Arabia's Sahara Petrochemical Company in the Al-Waha project, that includes a PDH and Spherizone PP plant in Jubail. And it recently announced it would take a 25 per cent shareholding in Saudi Ethylene & Polyethylene Company (SEPC), with Tasnee and Sahara, to build a major new olefins complex, also located in Jubail, featuring its Lupotech T and Hostalen technology.

On the licensing front, Basell's PP and PE technologies have been licensed for many of the region's upcoming projects, including the Yanbu National Petrochemical Company (YanSab), Rabigh Refining & Petrochemical Company (Petro-Rabigh), Saudi Kayan Petrochemical Company, SEPC and Al-Waha complexes in Saudi Arabia, and the Bakhtar Petrochemical Company in Iran.

Like other petrochemicals companies in the region, Basell's involvement in the Gulf is a reflection of market realities. With its cheap and plentiful gas reserves, it is the one region in the world where low-cost ethane, natural gas liquids (NGL) and naphtha feedstock is available. Together with China, it has become the investment destination of choice in the industry. Indeed, with demand growing rapidly in east Asia, the Gulf is set to become the only net exporter of PP and PE by 2010, according to Basell projections.

'Global demand growth is expected to remain healthy at an average of 4-5 per cent a year,' says Just Jansz, president of Basell's technology business. 'Market leadership is shifting from mature markets to China. Production leadership is shifting from mature markets to areas of the world with low-cost feedstock. Cash cost leadership will be in these feedstock-owning nations.

'We expect the Middle East to grow in importance in our industry and look forward to further expanding our presence. Looking at Basell's current global position, as well as what could take place in the future, it is possible that between 15-20 per cent of our capacity could be in the region by 2010.'

Among Basell's strengths are the company's ability to provide technology, catalysts and marketing expertise. 'Access to the customer and flexible technology with differentiated products is a winning combination,' Jansz says. 'We look to play to our strengths in technology and global market reach by contributing our PP and PE process technologies and catalysts, as well as providing marketing offtake and other services to the venture.'

But the onrush of both foreign and local investment has thrown up its own challenges especially in Saudi Arabia, the region's petrochemicals hub. E

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