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Yara's Hull Plant Mothballing Highlights Europe's Ongoing Energy Challenges

The recent announcement (on 7 February 2025) of Yara International's decision to mothball its Hull ammonia plant in the UK, which has an annual capacity of 300,000 metric tons represents a striking example of how Europe's energy crisis continues to impact industrial production.

This decision is part of a broader strategy to reduce European ammonia production by 1 million metric tons due to high natural gas feedstock costs and the impact of European carbon policies.

The Hull plant closure, likely permanent, reflects the challenges faced by energy-intensive industries in Europe, where elevated energy prices and regulatory pressures have significantly eroded competitiveness.

The Natural Gas-Fertilizer Connection

Fertilizer production, particularly nitrogen-based fertilizers, is
inextricably linked to natural gas prices. Natural gas serves not only as an energy source but also as a key raw material in the production process. Through the Haber-Bosch process, natural gas (methane) is converted into hydrogen, which then combines with nitrogen from the air to produce ammonia – the building block of nitrogen fertilizers.

When natural gas prices surge, fertilizer production costs increase dramatically, as gas can represent up to 80% of the production costs for nitrogen fertilizers. This direct relationship makes fertilizer plants particularly vulnerable to gas price volatility.

The Chain of Events: Europe's Energy Market Transformation

The current situation stems from a series of significant changes in Europe's energy landscape:

Europe took the decisive step of sanctioning gas imports from Russia altogether, forcing a dramatic restructuring of its energy supply chains. This led to a rushed transition toward liquefied natural gas (LNG) from distant suppliers like the United States and Qatar. However, LNG proves significantly more expensive than pipeline gas due to the complex processes of liquefaction, oceanic transport, storage and regasification.

Germany's decision to accelerate the dismantling of its nuclear power plants set an early precedent for increased gas dependency in Europe's largest economy. This shift put additional pressure on the continent's gas supplies and grid stability.

The situation intensified when the Baltic states decided to cut
themselves off from the Russian power grid on 9 February 2025, leading to significant spikes in regional electricity prices. This was preceded by Ukraine's decision to halt gas transit through its territory on 1 January 2025, which had been a crucial pipeline route for Russian gas reaching European markets.

New U.K. Tax Rates Are Hammering North Sea Oil And Gas Drilling

In the UK, the situation intensified in October when the UK government raised the Energy Profits Levy (EPL), commonly known as the windfall tax, from 35% to 38%. The United Kingdom currently imposes one of the world's highest tax burdens on offshore oil and gas production, with operators in the North Sea facing a total tax rate of 78% resulting from the combination of standard taxation and the EPL.

The policy has created a challenging environment for the UK's domestic energy production, Britain now paying the highest electricity prices in the World.

Norway's Gas Threat: A New Risk to Europe's Energy Security

Norway, a critical supplier of natural gas to Europe, has recently hinted at potential disruptions to its energy exports due to domestic and geopolitical pressures. Currently providing nearly half of Germany's gas supply, Norway has become indispensable for European energy security following the decline of Russian gas imports.

However, soaring electricity prices in Norway—six times the EU average—have sparked domestic backlash, with political parties advocating for reduced energy exports to prioritize national affordability. Additionally, technical failures, such as the January 2025 shutdown of Norway's Hammerfest LNG plant, have already tightened Europe's strained energy supply.

These developments highlight Europe’s vulnerability to disruptions in Norwegian gas flows, further exacerbating its ongoing energy crisis.

European Decarbonization Policies

Both the EU and the UK are undergoing significant transformations in their energy landscapes as part of ambitious decarbonization policies aimed at achieving net zero emissions by 2050. The EU’s European Green Deal and legally binding Climate Law, alongside the UK’s Clean Power 2030 Action Plan and Emissions Trading Scheme (ETS), have driven renewable energy adoption and reduced reliance on fossil fuels.

The measures have significantly impacted energy prices across Europe. Investments in green technologies, carbon pricing, and restrictions on fossil fuel use have increased costs for industries and households alike.

In the UK, phasing out coal power and limiting new oil and gas licenses have heightened dependency on renewables and imported energy, raising concerns about energy security.

Deindustrialization in Europe: The Impact of Surging Energy and Gas Prices

These rising costs are placing heavy financial pressure on energy-intensive industries across Europe and the UK, accelerating trends of deindustrialization, exacerbated by geopolitical tensions, net zero energy policy decisions, and the reduction of Russian gas supplies.

Energy-intensive industries, such as chemicals, steel, and aluminum, have been particularly affected, with many companies curbing production or relocating to regions with lower energy costs like the U.S. or Asia. Yara's decision to close its Hull ammonia plant is only the latest in a long list of industrial failures across Europe.

#naturalgas  #deindustrialization  #europe  #fertilizer  #ammonia  #lng #ttf

BPCL Mumbai Refinery

Bharat Petroleum Corporation Limited (BPCL) has unveiled plans for an ambitious $11 billion integrated refinery and petrochemical complex in Andhra Pradesh, marking a significant expansion of India's refining capabilities. The announcement comes as India positions itself to become a major global refining hub amid Western companies' shift toward energy transition.

In a recent interview, BPCL Chairman G. Krishnakumar highlighted the strategic importance of the project, stating, "We feel there is a big opportunity in the refining sector. India's primary energy demand itself is also going to increase three to four times as its economy expands." This expansion aligns with India's vision to become a developed nation by 2047, targeting a GDP growth from $3.8 trillion to $30 trillion.

The proposed facility in Andhra Pradesh will include a 9-million-metric-tons-per-year refinery and an ethylene cracker, with an estimated cost between 900-950 billion rupees ($10.56-11.14 billion). The complex will feature a 35% petrochemical intensity, and pre-project work, including land acquisition, has already begun.

The strategic location in South India is particularly significant, as approximately 80% of the complex's output will serve the southern region's petrochemical developers and automobile manufacturers. This new facility will complement BPCL's existing operations, which currently include three refineries with a combined capacity of 35.3 million metric tons per year, plus fuel purchases from the 3-million-metric-ton Numaligarh refinery in the northeast.

Beyond this major project, BPCL is diversifying its portfolio with renewable energy initiatives. The company aims to achieve 10 gigawatts of clean energy projects by 2035 and has formed a joint venture with Sembcorp to expand its current 300-megawatt renewable energy portfolio.

Additionally, Krishnakumar expressed optimism about the $20 billion Mozambique LNG project, led by France's TotalEnergies, in which BPCL holds a stake alongside other Indian companies. Operations are expected to commence in the first quarter of 2025, with gas monetization projected for 2028-2029.

The investment in the Andhra Pradesh complex will help BPCL reduce its dependence on external fuel purchases, which currently account for one-fifth of the 50 million metric tons of refined fuels sold through its retail stations.

#bpcl  #india  #refinery  #lng  #totalenergies  #grassrootrefinery  #steamcracker  #renewableenergy 

China's largest petrochemical industrial base has been fully completed.

On December 19, the second phase of the capacity expansion and high-end new materials project of SINOPEC's Zhenhai Refining and Chemical (ZRCC), a key project of Zhejiang Province's "14th Five-Year Plan", was fully mechanically completed, setting a number of records in the construction of domestic projects of the same size, including the most extensive application of independent innovation, the highest degree of intelligence, and the best energy saving and consumption reduction. So far, the refining capacity of Zhenhai Refining and Chemical has been increased to 40 million tons, making the total refining capacity of the Zhejiang Ningbo Petrochemical Base where it is located exceed 50 million tons, making it the largest, most technologically advanced, and most competitive world-class petrochemical industrial base in the country.

The Ningbo Petrochemical Industrial Base in Zhejiang is located in the Yangtze River Delta region and is a consumption center for downstream petrochemical products. The total investment in the Phase II capacity expansion and high-end new materials project of Zhenhai Refining and Chemical is 41.6 billion yuan, covering 18 units such as atmospheric distillation, catalytic cracking, polypropylene, and propane dehydrogenation. The new production capacity is fully focused on chemical processes, which will give rise to a number of high-value-added characteristic industrial chains such as "refining-propane dehydrogenation-propylene-acrylonitrile-ABS/methionine, refining-liquefied gas-isononanol-environmentally friendly plasticizers", focusing on the development of high-end polyolefins, high-end new materials, high-end chemicals and other products, which can provide nearly 8 million tons of related products to the downstream each year, providing strong support for the integrity and competitiveness of the industrial chain of advantageous industries such as automobiles, home appliances, and textiles in the Yangtze River Delta region, and driving the trillion-level output value of the upstream and downstream industrial chains.

The project has set multiple records and established industry benchmarks. It successfully achieved domestic production of 10 core equipment pieces, including the world's largest vertical labyrinth compressor. The project extensively implemented smart technologies, achieving simultaneous delivery of digital and physical factories, and deployed a fully independent domestic industrial operating system. It utilized the independently developed "Petrochemical Smart Cloud" industrial internet ecosystem platform to effectively support operational decisions and management. Additionally, the project was the first to comprehensively implement energy-saving measures, reducing overall energy consumption by approximately 11.7%. During the construction period, the project accumulated over 90 million continuous safe work hours, with a 100% quality pass rate for unit projects, setting a new industry standard.

Source: Xinhuanet

#china #sinopec #zhenhai #ningbo #zrcc #zheijiang #pdh #adu #fcc #acrylonitrile #abs #lng #refining #petrochemicals

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook, December 2024.

India has emerged as the leading source of growth in global oil consumption in 2024 and 2025, overtaking China this year, EIA reports.

China’s oil consumption grew by more than India’s in almost every year from 1998 through 2023, with China’s oil consumption regularly growing more than any other country during those years.

Over 2024 and 2025, India accounts for 25% of total oil consumption growth globally. EIA expects an increase of 0.9 million barrels per day (b/d) in global consumption of liquid fuels in 2024 and even more growth in 2025, with global oil consumption increasing by 1.3 million b/d.

Driven by rising demand for transportation fuels and fuels for home cooking, consumption of liquid fuels in India is forecast to increase by 220,000 b/d in 2024 and by 330,000 b/d in 2025. That growth is the most of any country in each of the years.

China’s liquid fuels consumption is expected to grow by 90,000 b/d in 2024 before increasing by 250,000 b/d in 2025. In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, a declining population, and decelerating economic growth have limited consumption growth for transportation fuels. Most of the growth in China is the result of increasing oil use for manufacturing petrochemicals.

Although India’s growth in percentage and volume terms exceeds China’s growth in the forecast, China still consumes significantly more oil. Total consumption of liquid fuels in India was 5.3 million b/d in 2023, while China consumed more than triple that amount at 16.4 million b/d in 2023, based on December estimates.

Read our oil demand forecast to 2050.

#fuels  #petrochemicals  #electricvehicles  #crudeoil  #naturalgas  #lng  #liquidfuels  #china  #india 

A completed LNG heat exchanger manufactured at Air Products' Port Manatee facility is being loaded on a carrier at the Port of Manatee for shipment to the customer.

On 10 July 2024, Honeywell and Air Products jointly announced today that Honeywell has agreed to acquire Air Products’ liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction. This represents approximately 13x estimated 2024 EBITDA.

Air Products’ LNG Business has approximately 475 employees with headquarters in Allentown, Pennsylvania and a 390,000-square-foot manufacturing facility in Port Manatee, Florida, where all sizes of CWHEs are made.

Currently, Honeywell provides a pre-treatment solution serving LNG customers globally. Air Products’ complementary LNG process technology and equipment business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment. CWHEs provide the highest throughput of natural gas in a single exchanger with a small footprint and robust, reliable and safe operations both onshore and offshore.

Air Products continues to focus on its two-pillar strategy to grow and invest in its industrial gas business and drive the energy transition through clean hydrogen at scale.

#lng  #hydrogen  #greenhydrogen  #bluehydrogen  #liquifaction  #naturalgas  #airproducts  #honeywell 

Al Zour refinery in 🇰🇼 Kuwait was officially commissionned on 29^th May 2024.

#crudeoil  #lng  #refining  #Refinery